Google Phone Ups the Ante

Wayne Rash
The weekend's revelation that Google was passing out new phones to some of its employees stoked the rumor mill up to 12 on a scale of 1 to 10. Is Google getting ready to start selling its own phones? Will the search provider open another front in its war against Apple? Will Android take over the world?

Now that Google's open source Android operating system has spread beyond its introduction at T-Mobile to two other major carriers, Verizon and Sprint, the squeeze is on Apple's iPhone. And the squeeze is coming from several directions at once. The usual open-source fervor is showing itself in Android applications. Verizon's ad campaign for its Droid phone is relentless. And both Sprint and Verizon can focus on market share now that they've stopped suing each other.

So things are already getting hot for Apple. Customers have someplace to go for a touchscreen phone with a sleek design and good music and video support, great search support, and lots of applications (even if there are currently far fewer than there are on Apple's iTunes). But now the next shot has been fired.

Google's new phone is alleged to be sleek, thin, well designed and, at least for now, unlocked. The employees that are using the new Google phone can use it on either T-Mobile or AT&T. In contrast to the iPhone, which is less thin and locked, the new phone is getting attention. Yes, we all know that it's possible to get an unlocked iPhone, but not from Apple. And Apple is working harder than ever to discourage such unlocking.

The question, of course, is whether the Google phone is really the game-changer it appears to be. At this point, all that Google is willing to say is that it's using the phone as a test platform so that it can try out new software in a real-world environment. But would Google go to the expense to create a phone just for software tests? There are plenty of Android phones already out there, after all, and surely Google knows how to unlock them so they can be used for testing on other networks.

In reality, though, the world of smart phones is changing fast. The iPhone is already yesterday's technology, and while a lot of people still think it's the coolest thing since night baseball, the fact is that Google and others are starting to press the iPhone pretty hard.

Nokia, for example, has drastically revamped its smart phone line, cutting back on the number of models available, while creating new models that will sell for significantly less. Nokia is saying that their new Symbian phones are better and cheaper than the iPhone. RIM is quietly upgrading its BlackBerry line with some very sleek devices that are designed to appeal to a different type of user than the iPhone. And Microsoft has just launched Windows Mobile 6.5.

What's important to remember is that while both Google and Apple are laying siege to each other, they're really fighting over a fairly limited part of the phone universe. The world is full of users that just want a plain old cell phone. They don't want e-mail, text messaging or Web browsing. Some don't even want cameras. Other users want the known security and support for their enterprise applications that Microsoft and RIM provide, and don't really care about cool software or music players.

Microsoft-based phones and BlackBerries are clearly focusing on the business user where there's a reliable revenue stream, a need for advanced features that business users care about, and the need for the advanced levels of security they demand.

Google and Apple are really fighting over a consumer-oriented market that also needs some support for the enterprise, probably as a way to justify the expense. Of course, both RIM and the companies that use Windows Mobile are trying to include consumer-friendly features to attract users who don't want to deal with the annoyances of e-mail without keyboards. And both Apple and Google are finding ways to support at least some level of security and enterprise e-mail access.

The battle lines are drawn, but the battle itself, not to mention the eventual victor, remains in doubt. While Google and Apple bludgeon each other, they may have taken their eye off of the real prize. According to some analyst reports, at least, it's RIM that's quietly going about building market share, customer satisfaction and carrier loyalty.

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