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article imageGoogle Entering Cellphone Market With 'Android' Announcement on Monday

By Chris Hogg     Nov 4, 2007 in Technology
It's a move that will pit the company against both Apple and Microsoft: Google is getting its mobile fingers tapping with a free, open-source cellphone package to be announced Monday. When a giant makes a step this large, get ready for big footprints.
Digital Journal -- According to reports, Google has been working throughout the weekend to iron out agreements with wireless carriers, phone makers, and software developers to launch a new project code-named Android, a platform for creating applications for mobile phones.
Google has stayed mum on rumours of its moves into the cellphone world, but according to unnamed sources, the announcement comes Monday, Nov. 5 at 11 a.m. (Eastern).
So what's inside? According to PCWorld: "Google will announce an open source development platform for mobile applications that will contain a full set of components, including an operating system, a set of common APIs, a middleware layer, a customizable user interface, and even a mobile browser, sources said. Instant messaging standard protocols will also be supported."
Insiders familiar with negotiations say a Google-branded phone that could be sold in stores is not part of the discussion. USA Today says these insiders chose not to be identified because the announcement has not yet been made.
Google's development platform is reportedly going to be free for anyone who wants to use it and the ultimate goal is to lower cost and make mobile applications easier to create. Google wants to spur innovation in this area, as it says the current market is "hampered by technical fragmentation."

Creating Competition for iPhone

With this release, Google is positioning itself to compete with (or at least throw a wrench at) Apple. Apple's iPhone has been incredibly popular this year, and it's given both AT&T and Apple a bit of a leverage point in the cellphone market. But with a Google platform launch, it could speed up carriers' ability to come up with competing handsets.
Apple plans to launch its own developer kit for the iPhone in February 2008.

Killing Microsoft Mobile

In addition to Apple, the mobile platform will also now put Google right into Microsoft and Symbian's backyard, and offer Google a chance to speed up improvements to make it easier for people to access online services such as search engines and programs from mobile phones.
When it comes to competition, the results could really hurt Microsoft.
As the New York Times speculates: "An irony in all of this, of course, is that Google, though not in a dominant position in this field, might be able to replay the strategy that Microsoft itself used to bulldoze Netscape in the mid-1990s. Just as Microsoft successfully “cut off” Netscape’s air supply by giving away its Explorer Web browser as part of the Windows operating system, Google may shove Windows Mobile aside if the Google Phone is given away to hand-set makers."

The Ka-Ching of Mobile Ads

And of course, the real nugget for Google in this move is mobile advertising revenue. By pioneering and opening usage, the company will not doubt see its bottom line pick-up with mobile use.
The mobile ad market is small but it's also on the cusp of massive growth. According to Opus Research:
MU.S. and Western European mobile advertising revenues will reach a combined $5.08 billion by 2012, up from an estimated $106.8 million at year end 2007. The U.S. is anticipated to drive roughly $2.3 billion of the total, while European markets will see revenues approaching $2.8 billion within the forecast period. The figure represents a compound annual growth rate (CAGR) of 116 per cent for the combined regions.
Regardless of having hardware or not, Google needs into the mobile space with more power and position than it currently earns; cellphone carriers have so far been very reluctant to relinquish control to third parties, fearing they will be left in the dust in the mobile advertising market. Verizon has already held back on fully integrating Google's search engine because the company said Google was demanding a large chunk of search-based ad revenue (see past coverage).
As CNet reports, mobile phones are going to become far more sophisticated over the coming years and it's no secret that a truly mobile PC is the ultimate goal -- one that Google can and wants to be part of.
Google has the engineering talent to make a concerted push into this area while keeping rivals like Microsoft at bay, and it has enough resources to force the industry to take it seriously, despite its relative lack of experience in the market.
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