Why Google Shouldn't Make A GPhone (GOOG)

Another day, another GPhone rumour… that is, that Google (GOOG) is going to build its own mobile phone (or licence its name) to go after the likes of Apple (AAPL), Research In Motion (RIMM), Nokia (NOK), etc. We’re pretty sure this isn’t happening, chiefly because Google keeps saying they’re not interested in doing it. And as we’ve said before, we think Google’s got this one exactly right: The best move for the company is to continue focusing on its mobile advertising offerings and its Android operating system, not building its own mobile phone.

Why not? Because the best way for Google to dominate the mobile search/advertising markets is by using the same strategy it used to dominate the Web — be used by as many people as possible. And the best way to be used by as many people as possible in the mobile industry is to get your software on as many gadgets as possible, through as many carriers as possible.

That’s why we think Google’s Android approach — giving gadget makers and carriers a free, powerful operating system and helping them customise it — could pay off. Gadget makers will (in theory) get the best mobile operating system they’ve ever used, and carriers will (in theory) get more people using the mobile Internet, which means subscribing to monthly data plans. Google, in turn, will get more people using mobile Web services, and (in theory) clicking on Google ads.

To be sure, if the first batch or two of Android phones are duds, it might make sense for Google to team up with some industrial engineers and provide reference models for manufacturers and carriers to use as suggestions. But unless Google has managed to invent the most amazing mobile phone of all time, can both heavily subsidise it and generate massive revenue off it, we don’t think making a GPhone makes much sense right now.

Many will compare Google to Apple and point out the success of the iPhone as an achievable benchmark for Google. But remember: If Apple is successful this year, it will sell 10 million phones — in a market of 1 billion. That’s 990 million phones that aren’t Apple. We think Google’s best going after the 990 million — and continuing to enjoy the massive flood of Google search traffic that comes from the iPhone — before it even considers making its own phones — and enemies.

See Also:
Is Google Building A Gphone? Not According To Google
Apple Guy John Gruber: Rooting For Google Android, But Expectations Low
Why Google’s Android Delays Don’t Matter

Image: Lorin Wood via Last100

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