Nov 19th, 2009

The gPhone is still dead.

Despite two years of fighting off the gphone vs. android phone fallacy, people still didn’t get it. Starting with industry analysts who perpetuated the distant rumors, trickling all the way down to consumers who had no clue what Android was or is but have heard about some sort of Google Phone or gPhone, it was inevitable that we would always arrive at this dead end rumor. And frankly, I grew tiresome of having to re-explain the position every. single. time.

Then I called a couple people idiots.

That’s right – TheStreet.com published an article citing several souces, most notably Ashok Kumar and Michael Cote, both of whom lent their support that an actual Google Phone – the one I had denied for 2 years – was actually coming. Idiots. Not this again. So I did what any irritated blogger would do – I called them idiots.

gphone

Suprisingly enough, Michael Cote from The Cote Collaborative himself followed up with me and over the next several weeks we engaged in a number of conversations. I was skeptical/cautious, but I try to keep an open mind… and then he told me a few things in confidence that turned out to be true. He told me that “Droid” would be a family of phones – not just the Motorola Droid. He told me that the HTC Desire would be launching as the “HTC Droid Eris” around the same time as the Motorola Droid. NONE of these things had been published elsewhere yet… and then Engadget broke the news a few days after we spoke.

He was a few days off on the launch date, but unlike other analysts randomly spouting off at the mouth, it was pretty apparent this guy actually knew what he was talking about. We did talk at quite some length about the puported gPhone rumors, and Cote suggested some ideas I had not heard before, but I didn’t feel it appropriate to share them. Not yet at least.

And then yesterday, TechCrunch resurrected the Google Phone.

First let me share you what TechCrunch is saying… and I’ll continue with what I’ve heard and follow up with my own thoughts. The two TechCrunch articles (here is the second) make the following claims:

  • Planned for Holidays 2009, but delayed
  • Launching January 2010
  • Only Google branding… nothing else
  • HTC, LG and Samsung could all be the makers… but they think LG is “the one”
  • Could be data-only VoIP plans… no voice

So what did Michael Cote think about all of this?

  • January is optimistic, “first part of the year” would be more accurate
  • HTC is definitely making a Google Phone at Google’s request
  • Google is assisting and providing input on hardware decisions, but after acknowledging less than perfect hardware decisions on the G1 (which they did dictate) it’s more of a collaborative conversation… with Google merely insisting on certain ideals.
  • He can’t confirm/deny LG and Samsung Google Phones but thinks it unlikely at this point
  • Could eventually alter the economics of the industry

Alright we should pause for a minute here. What in the HECK is going on? Didn’t Andy Rubin SPECIFICALLY say that Google was NOT making hardware and would NOT compete with their customers, quoted directly in a CNET article:

“We’re not making hardware…We’re enabling other people to build hardware,” and “Rubin, vice president of engineering for Android at Google, scoffed at the notion that the company would “compete with its customers” by releasing its own phone.”

These don’t X-out the possibility of a Google Phone. Whereas people first viewed Android as an attack on the mobile hierarchy, we’re now seeing companies like Verizon fully embracing the concept. And that might be at the heart of this “Google Phone” confusion. If Google were to make a Google Phone its pretty obvious they would want to tightly integrate Google Voice. But after AT&T banned Google Voice from the iPhone App Store, Google felt like no carrier would allow them entry and the Google Phone wheels started turning a little faster in Mountain View. The Google Phone would be their way of leveraging Google Voice. It wasn’t until AFTER this that Verizon Wireless and Google entered into their agreement – where Verizon mentioned they would allow Google Voice – and Google was already set on releasing a holiday Google Phone.

Perhaps Andy Rubin is looking at the mobile world differently and honestly believes that a Google Phone is bringing even MORE opportunity to its customers/partners by once again changing the way the industry is perceived, operated and valued. Basically, Andy Rubin could be working with HTC to produce a Google Phone (working with other people to build hardware) with the understanding it wouldn’t compete with current customers but instead provide new opportunities (data contracts).

Well, didn’t HTC CEO Peter Chou recently ridicule Google, calling their practices “destructive” in a recent interview:

“HTC’s loyalty also extends to Google, even amid reports that the search giant is developing its own Android handset. “Google tries to do things differently from the rest of the industry,” Chou notes. While some of Google’s actions can be “destructive,” Chou says, HTC still values the partnership. “We’ve worked with Microsoft for 13 years … I also believe we can work with Google for a long time,” he adds.”

That would lend credibility to a possible Google Phone being created but perhaps NOT by HTC. And oh yeah, another “What the heck?” moment – isn’t this “Michael Cote” guy that I’m now quoting as a source also the same guy that I called an idiot”

“It’s a bit of a departure from Google’s strategy, but I think the speculation is valid,” says Michael Cote of the Cote Collaborative. And as for getting the phone to the market quickly, Google “would probably use a partner they are familiar with.”

Yes, indeed. But just as I call people out, people have the ability to call me out… and I admit when I’m wrong. I’m not ready to full on admit that yes – a Google Phone is coming and I definitely won’t stand by a timeframe of January 2010. But at the same time, from my conversations with Mr. Cote I have to retract that “idiot” statement and it appears I may be making good on a little side bet (see the comments of the idiot article) and acknowledging my own idiocy.

But give me a LITTLE credit here – I have always said that for Google to enter the handset market with their own Google Phone, they would have to do something pretty mind blowing. They would have to deviate from the status quo. And I’m not talking about hardware decisions only… I’m talking about software decisions, distribution agreements, the whole shebang. And perhaps the pieces are now in place to make that happen.

According to another source, Google is not working with any particular carrier on the Google Phone but instead will sell the device through retail channels. A carrier negotiation isn’t out of the question but at this point, isn’t in the cards. In addition to Wi-Fi it will likely have either EDVO Rev A or HSDPA which are the data connections for CDMA networks like Verizon and Sprint and GSM networks like AT&T and T-Mobile (respectively). Representatives from the latter already allow customers to enter into data-only agreements that don’t demand a mobile phone service plan, so the idea is that the Google Phone would use these data connections to send and receive calls (VoIP) isn’t outrageous. In fact, several applications on Android Market do that now already… and I’m sure Google will be leveraging their new acquisitions (Gizmo5 and Admob) in this process.

So theoretically speaking, you could buy the Google Phone from a retailer at an electronics store, activate it on any carrier of your choosing (with regional limitations), enter into a drastically reduced monthly plan that is based ONLY on data connections, and use your phone just like you would your current phone. At home it would make/receive calls through Wi-Fi and on the go through a data connection. Yes… that is the kind of game changing move that might be worthy of a Google Phone and I think Peter Chou would be right to call that “destructive”. But hey, to build a much better bridge sometimes you’ve got to knock over the current one and start from scratch.

But it might not stop there… and please understand that this is PURE speculation on my part – but what if Google were able to really leverage their advertising network and the concept of geographic targeting to integrate a search and advertising solution in the Google Phone that would drive LOTS of revenue. The kind of revenue that makes up the bulk of Google’s profits with their Adwords/Adsense advertising system. Don’t you think that Google themselves might be willing to subsidize these phones considering that, without the subsidies of a mobile carrier, these phones would likely be a bit more expensive? Not that it will happen, but its something I’m sure all the players are thinking about.

Remember how AOL would produce seemingly billions of CD-ROMs and blanket the universe with them? They’re in your mailbox everyday, on every store counter, handed out at concerts – you can’t go anywhere without seeing one! And with every single one, AOL was giving away a free XX hour trial. Why? Because by paying for the CD-ROM manufacturing and giving a free trial, AOL was generating new customers, more eyeballs, more ad dollars, more subscriptions, more everything. That model worked brilliantly… and perhaps Google is going after the FREE mobile internet version of AOL. Only a mobile phone is a really expensive version of a CD-ROM!

I’m not ready to put my full stamp of approval on the Google Phone rumors being true. But I can tell you, if I were a betting man, 2 months ago I would have bet against a Google Phone being launched within the next year. Right now? I wouldn’t make that bet at all… and at this point it wouldn’t even surprise me. In fact, I’m kind of hoping I have to admit I was wrong all along and make that dreaded post because, come on people, there is no way Google would release their own phone if it didn’t absolutely rock.

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