Google sends Android to conquer mobile world

With a leap into software for mobile devices, Google has a chance to control the way you look at the Internet.

The search king became popular more than a decade after PCs went mainstream and several years after the Web became a staple. Has Google done exceptionally well? Of course. But it's one of many companies vying for eyeballs on the PC browser.

Enter Android. Unlike the PC market, Google joins the contest for mobile access to the Internet with its Android software while there is still much work to be done. Many would argue Apple's iPhone was the first mobile computing device to allow a Web page to look exactly as it does on a PC's browser.

The search giant announced the Android platform for mobile devices and the Open Handset Alliance on Monday in a move to break the lock existing carriers and phone makers have on the industry and make it as easy to use the Web on mobile devices as it is on desktop computers.

With Android, Google can ensure current and future mobile phone subscribers can see Google services, applications, and ads. Also, the announcement could pave the way for a Google branded phone that would give the company a direct connection to consumers, even more than the ubiquitous search bar. And don't count out a Google phone just yet.

"I think the alliance is great cover for them to launch a Google Phone," said Danny Sullivan, editor of Search Engine Land. "They want to launch a Google phone and if they're going to launch a Google phone they think they will be more successful to have a whole new operating system and have people supporting that.

"There are 2.5 billion mobile phone users in the world. That's double the number of people who use the wired Internet today. That's the right motivation for Google."

--Ken Dulaney, VP mobile computing, Gartner

In a conference call, Google Chief Executive Eric Schmidt sidestepped questions about whether Google would ever announce a Google phone. "We're not announcing a Google Phone today," he said. "If there were to be a Google phone, Android would be an excellent platform for it to use. Imagine not just one Google Phone or Gphone, but a thousand Google Phones."

But prognosticators are still reading between the lines. Google executives "had every opportunity to say 'we are not introducing a Google Phone' and they did not say that," said Derek Brown, an analyst at Cantor Fitzgerald. Google won't become a hardware manufacturer, "but the opportunity to have a phone in the marketplace that bypasses existing standard operating procedures and creates a direct connection to consumers, that certainly makes sense," he said.

Of course, all this comes with a big caveat: For all its success in search and advertising, it's not clear how well Google's many other initiatives are doing. Indeed, with the Internet ad business running like an ATM, few have noticed that initiatives such as the Orkut social network and Google Checkout haven't yet amounted to much. But Android could be a different story. If it doesn't gain traction by the end of next year (the first phones using it should be available in the first half of 2008), Wall Street finally notice Google has had difficulty breaking out of its admittedly sizeable niche.

Right now, Google is the most popular search engine and makes the most money off advertising on the Web. But there is limited growth potential for the desktop market. Not only are more mobile phones being sold now than desktop computers, but many people in developing countries will end up using a mobile device before they ever touch a PC.

"There are 2.5 billion mobile phone users in the world. That's double the number of people who use the wired Internet today. That's the right motivation for Google," said Ken Dulaney, vice president of mobile computing at Gartner.

Google executives are thinking along the same lines.

"There is a good chance that the number of potential consumers of Google???may never have a PC," said Rich Miner, who heads up Google's wireless strategy and was a co-founder of Android. "So one of our clear goals was to find a way and have a platform (to) deliver Google services, Google content, and Google search into those markets, and the mobile phone is going to clearly become much more of a development platform."

Google views the Android development platform as a way to continue leveraging its services and apps on more phones and to "get our brand out there," he said.

Asked how strategic mobile ads will be for Google, Miner said: "We will have ads incorporated into handset versions (but) there is not any sort of Google ad engine built into the platform. The goal is really not to tie this platform into anything specifically Google."

By creating a mobile operating system that developers will be writing to and carriers will be installing on their handsets Google is guaranteeing that its services are baked into mobile experiences going forward. "They are ensuring that in the operating system itself Google is one of the choices you can make use of," said Sullivan. "They've managed to put themselves where previously, on some devices, they would have needed to cut a deal" with handset makers.

Since dominating the search market and the online ad market, Google has been quickly expanding into other areas, including hosted Web apps, like Google Docs & Spreadsheets and Calendar. But mobile devices represent the next "big thing" for Google, unchartered territory whose development for Web services and applications has been restrained by carriers and hardware makers who fear losing their control.

Oppenheimer estimates that Google's mobile ad revenues will be anywhere from $2.1 billion to $4.8 billion per year after two or three years, and as much as $10 billion annually after that.

So what's next? Google executives also have said they will probably bid on the 700MHz spectrum auction early next year, which will give mobile users another conduit for the Internet and its own services. "Android would run very well on that network," Schmidt said during the conference call.

And Google isn't just envisioning mobile phones. Schmidt promised that Android would start "a whole wave of innovation and set of industry initiatives we can't even foresee."

"As a result of this platform you'll be able to do amazing things with your mobile devices that you've never thought of," he said.

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