November 19, 2009

The Google Phone will be free

UPDATE: It seems I was wrong, but not before others picked up on this idea. As it turns out, the Google Nexus One isn't nearly as disruptive as a VOIP-driven, ad-supported device could be. I still maintain that the below is possible, and hopefully we'll see it one day soon.

This isn't specific to film, but considering mobile devices today are much more than just phones -- they're connected computers that serve as our digital, personal assistants -- this has bearing on how all of us will be interacting with each other (and content) in the future. So I thought I'd throw around some unqualified and totally speculative speculation about What's Next when it comes to mobile platforms.

Lots of talk today about Chrome OS, the forthcoming operating system from Google. It's a browser- and cloud-based operating system, and it's definitely on its way. But yesterday the buzz was all about the forthcoming/not coming Google Phone, which everyone seems to disagree on. TechCrunch claimed it exists, despite Google's assertion that they wouldn't release their own phone and cannibalize sales by hardware partners (Motorola, Samsung, et al). Indeed, it's hard to believe Google would develop their own device when they already have a strong hand in developing said hardware, as they reportedly did with the Motorola Droid (of which I'm a current user). But then TechCrunch speculated that the Gphone may not be a traditional cellular phone but rather a mobile VoIP device that uses Google Voice (similar to Skype) to handle all calling. Now their assertion starts to make sense, as Google Voice is already a game-changing application on Google's mobile OS, Android (which is different from Chrome). On my Droid, I'm already using Google Voice to send SMS messages for free, bypassing the carrier's ridiculous $20/month messaging charge ($30/month for data is understandable, but text messages are just that -- data -- and infinitesimally small bits at that, making the additional fee downright offensive). In Android, you can select what to use Google Voice for -- all calls, international calls, or not at all. Say you turn it on for "all calls." Now when you place a call you're not even using your carrier's voice network.

See where this is going? Text messages are data. Calls can be treated as data. TechCrunch's assertion that it'll be a data-only device is convincing. But it seems unlikely Google would make their own hardware, right? They're a web services company, and no matter how smart their engineers and programmers are, they'd have no reason to jump into the personal electronics game, where margins are razor-thin and companies are foundering by the dozens. As more and more smartphones hit the market, the hardware will become commodified; a high resolution screen, multitouch, and decent speaker will get the job done. Android's touch keyboard in landscape mode is the same thing as the iPhone's, and it works fine; the iPhone's competitors are catching up to the iPhone and the iPhone itself isn't innovating as much either (from a hardware standpoint, the 3GS was just a faster 3G).

Google wouldn't jump into the hardware game to build a better device (they already work with manufacturers on that) or to try to create something to compete at the iPhone's price point. The reason Google would jump into the hardware game is to manufacturer something cheaply to give away for free.

If Google's basic business model is, "give people something they want, charge nothing, and make money via targeted advertising," then the mobile phone is the final frontier. Instead of web advertising motivating users to click on a hyperlink, mobile advertising gets someone to walk into a physical store. If you're walking down the street and you search for Pizza, the results you get could be paid for. When you Google something in your browser today, this is already the case; there are the algorithm results, and then there are the Sponsored Links. Each time you click on a link, the advertiser pays Google. In the case of mobile search, when you find a store using Google Maps and then physically walk into that store, the GPS in your phone can report that as an acquisition; the store would then pay Google for the added foot traffic.

I'm not entirely convinced that Google will "make" their own phone (I say "make" because even if they do, it'd likely just be an unbranded Toshiba/Samsung/LG device). With Chrome their plan is to allow hardware partners to produce their own variants of Google's reference designs; if they're not going to build their own netbook, why would they build their own phone? If they did release a phone themselves, they'd have to have an ulterior motive. They could build a simple, straightforward, free device, make a billion in order to get costs as low as possible, and release it worldwide, all in the name of collecting obscene amounts of user data along the way. But they're going to do this anyway with Android and Chrome and all their web apps, without giving away a piece of loss-leading hardware.

More likely is the possibility of a Google Plan as a free, lower-bandwidth alternative to plans from Verizon and AT&T. People worry far too much about the price of the device itself, as if the difference between plunking down $100 and $200 at the store means anything when you're contractually signing away $2,400 on the spot (a two year contract at $100/month). Based on that knowledge, carriers subsidize the price of a device as long as you sign their hefty contract; seen this way, many phones today are already "free." Therefore, it's not the the device that matters. It's the service. And it's going to be free.

The money Google brings in from mobile advertising (they just purchased mobile ad provider AdMob for $750 million) will more than cover any data charges they will subsidize a carrier (this was probably why they bid $4.6 billion on that 700mHz spectrum). You won't have a monthly bill. You'll just have a free device that does everything.

Of course, the phone will be reporting your whereabouts and activities to Google Mothership, and this raises all sorts of privacy concerns, etc. etc. But Google already scrapes data from much of our lives anyway, especially those of us who use Android or Gmail or Gmaps. What's a little more personal info, when it comes down to it? Privacy ain't free.

Your Comment

24 Comments

Someone on Techcrunch linked to this article, and I came here and read it, then posted this as a reply to the simple link:

To anyone whos reading the comments I strongly recommend you read this article.

I’ve watched Google since they were founded. in that time I have noted 3 things Google does.

1. They never plan for the short term. They decide what they want to make happen 10 years from now and then proceed to plan backwards from that. They plan ahead. ICANN is now international and URLs will be in every language. Google can already translate web pages, URLs will be no different. They make mistakes, but they still tend to be years ahead.

2. They do not charge their users. EVER. They are not a company that makes money off the public. They are a company that earns money off of businesses. Every program, every app, every service is free to the user.

3. They kill cash cows. Note that for the last several years they have been making their own up to date maps. Now, they own the most accurate road maps in the world. They released a GPS navigator for free. Time and time again, Google creates a product that undercuts, and eventually crushes competitors… because it’s free. It might take several years, but they almost always end up being the dominant product.

This article makes a very logical point. The Google Phone may very well be absolutely free to users, and charge businesses for in store traffice directed to them by their new Navigator. You use the Google phone to go someplace, that place pays Google. The phone and service fees are covered by that revenue and the end usesr pays nothing, just like every other product from Google.

It doesn’t have to compete with high end phones, or be the “best”. Just being free will make it a massive success.

And over the course of the next few years, it will get better, more sophisticated, and more powerful…

And it end up wiping out the Mobile Carriers, Phone makers, and even the iPhone.

Because what Google may be designing isn’t a phone at all.

People have been talking about how Phones and Computers and various other entertainment devices are becoming more integrated. You have Gameboys, PSPs, IPods, IPhones, etc.

But what none of these things do is connect directly to your computer in the sense that they are pretty much the exact same thing in different sizes.

Between ChromeOS and Android, a Google Phone could be your desktop PC, only smaller. Free connection to an always available internet, able to connect remotely to your personal data on your home system as well as freely accessing the cloud, able to do everything your PC can and running the same apps. It could possibly even share processor resources with your home system using distributed processing.

And all those “Competitors” will have ceased to have a cash cow, and unless they shift to a similar Business model (years behind Google) they will cease to exist.

November 20, 2009

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Valkyrie Ice

Valkyrie Ice you are so right!! I agree 110% I want one now, and would even sacrafice not having WiFI everywhere, jsut to get rid of my cash cow phone! Screw At&T and Verizon they can suck it down !!! HAHA

November 20, 2009

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Anthony C

Valkyrie- Thanks for reading and responding. I think people spend far too much time talking about the placement of buttons or other minutiae of device construction, since the innovation in phones will soon level off (like, say, laptops), if it hasn't already. If Google's going to do something truly disruptive in this space, it will be on the service side.

November 21, 2009

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avatar
Ryan Koo
Founder
Writer/Director

I have been trying to explain this to my shortsighted colleagues for years. We may not understand everything Google does when they do it, but there's always a purpose. I've been waiting for it for years. Its finally happening and I've been able to watch it all unfold. If only more entities would take responsibility, and look more toward the future instead of the buck today, we'd all be much better off.

November 25, 2009

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Will

I wonder if it has occurred to anyone that telco's are completely unnecessary?

If some bright designers got together, built a wireless system that not only connects to any available network but to any other nearby available wireless device, be it smartphone, laptop, desktop or whatever, using it as a ad hoc network connection and potential routing hub, it seems like it should be quite possible to build a nationwide network that has absolutely no dependence on the telco's good graces to connect, enabling smartphones to bypass the cell tower grid and get reception anywhere by simply connecting to the nearest other device like the internet does.

With the increasing number of smartphones, netbooks, and the upcoming tablets available, most cities should be saturated with enough potential nodes to provide a connection anywhere within it, regardless of whether there is a tower nearby or not. Especially bad reception cities like San Francisco would benefit enormously from such a system, no?

And you could basically tell the telco's to shove it.

November 26, 2009

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Valkyrie Ice

It seems like a bit more airspace would be needed for the long term to make it really work, for everyone.

November 27, 2009

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Will

Google as Robin Hood makes me root for a company for the first time. It kinda creeps me out that all my digital communication can be seen by them, but I guess it's better to have it all centralized to one company that seems to have my best interests in mind (FREE). I guess the real concern is, "Who really is Google?" In the meantime I will trust them, primarily because at the moment I'm not running any secret cells or underground political conquests.

Valkyrie Ice, the thought of Google putting the wireless phone companies out of business at the expense of business (via advert dollars) blows my mind with excitement.

December 1, 2009

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1977twenty3

I certainly hope this is true. A "Free Google Phone" was a rumor for quite some time now, but always poo-pooed as ridiculous. The article and comments above lay out a very convincing argument for just such a thing.

And boy am I glad that I let my Verizon contract run out earlier this year. I let it lapse and went with a month-to-month plan.

I need a new phone. Hello, Google!

December 1, 2009

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bc

I could believe that, if they're doing this (still a big IF), they could make a Wifi/VoIP phone only... that would work. Not like current phones, though... things like Google Navigator currently depend on a permanent wireless network.

So, the real question is, what about that? Google doesn't own a wireless network... there are four of them that more or less cover the USA: Verizon, Sprint, AT&T, and T-Mobile... and that's very much "more or less".

Google is a partner in Clear, the company donig WiMax nationally (includes Sprint, Comcast, Intel, and a few others). They're now delivering spotty but high speed coverage in five or so cities. That's not a general answer, either.

They could hook up with a mobile carrier and pay the connection fees themselves. But why would any mobile carrier help them advance the inevitable move to an all-IP network... not as long as they're still nickel, dime, and dollaring you for voice and text minutes. That's prime real-estate... a 1200 minute monthly phone plan is only going to run you about 100MB of total potential data traffic. This pretty much proves that any "unlimited" plan could easily move voice to data, only, that would take money out of the wireless companies pockets and boost their 3G traffic.

They really don't want that to happen until 4G... particularly if they have spotty 3G coverage (Verizon is universal 3G, though it's slower than AT&T's best verison, and like anyone else, you'll get bumped to EDGE if you're too far away or there's too much other 3G traffic). AT&T is about 20% 3G, but roughly the same 2G coverage. Sprint has less overall coverage, and T-Mobile less still, with a small percentage of that being 3G.

December 1, 2009

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hazydave

There's a difference between giving out free software and free hardware. Hardware has a huge per unit cost.

December 13, 2009

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Cos

mobile advertising would be the next wave of the future`'.

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