Google's Gargantuan GPhone Gamble: Where's The Money Going?

Google’s mobile phone project, outlined in today’s Wall Street Journal ($), makes a lot of sense. Mobile phone software, for the most part, is poorly designed and marginally useful. Some 90% of U.S. wireless users don’t use the mobile Web or wireless email yet, and Google can make a big splash by expanding its smart software to more devices and services. And mobile advertising is poised to explode.

But the article also includes an alarming sum: “Google has invested hundreds of millions of dollars in the mobile phone project, say people who have been briefed on it.” We know that much of Google’s rising capex goes to servers and the like, but that seems less relevant for a service that doesn’t exist right now. Where is that money going?

The most obvious answer is salaries. Google’s public job listings include a handful of mobile engineering openings in multiple locations, such as its Mountain View, Calif. headquarters, New York, London, Beijing, Delhi, San Bruno, Calif. (YouTube), and Boston. Surely many jobs are not advertised on the site. But even the smartest engineers with the most posh pay packages can’t run a tab that high.

Google has also acquired at least a few companies in the mobile industry, such as Reqwireless (mobile software), Dodgeball (social networking) and Android (mobile software). The big catch with Android is Andy Rubin, formerly head of Danger, which makes T-Mobile’s popular Sidekick gadgets. But these are presumably small acquisitions, worth at most a few million bucks a pop.

And certainly some of Google’s spend has gone toward R&D, like developing prototype handsets and securing component suppliers, as the Journal reports, but partner companies probably subsidise those costs, too.

So beyond trips to Seoul to court LG, or trips to Basking Ridge, N.J. to court Verizon Wireless, it’s still a bit tricky to figure out where “hundreds of millions” are going. We’re open to any suggestions you may have…

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.