Why the Google Phone Could Dampen Android Phone Sales

By Clint Boulton  |  Posted 2009-11-23

Why the Google Phone Could Dampen Android Phone Sales

News Analysis: Many of you by now have read about the rumored Google phone, that Google Android operating system-based and Google-branded smartphone to beat other Android smartphones, and maybe even Apple's iPhone.

TechCrunch and other blogs are seemingly trying to will the device, or at least some sort of VOIP device, into existence.

I don't claim to have new information about said Google phone. I'll have to wait and see like everyone else, though it is fun to write about. Unfortunately, the wait and see could hurt other Android phone makers. I'm speaking on a personal level here.

I've long been interested in buying an Android phone and recently tested both the Motorola Droid and the HTC Eris from Verizon Wireless. I liked both, but am partial to the Droid. I was all set to buy one, but now I'm not so sure. Blame the Google Phone rumors and the sound logic of BroadPoint AmTech analyst Mark McKechnie.

In this report I covered last week, McKechnie said a Google smartphone made by one vendor would be preferable to current Android devices such as the Droid, Eris or myTouch 3G.

Why is that? Well, McKechnie eschews the so-called "kludge" model of current devices that plunk, say, Android's operating system and applications on hardware from Motorola or HTC for integrated phones such as the iPhone, or the Palm Pre or RIM Blackberry gadgets: "We much prefer the seamless integration style of Apple," McKechnie wrote.

As a consumer hungry for more information to help me make a purchasing decision, I extended that logic to the Google Phone, which is supposed to be an integrated device in the iPhone vein. McKechnie wrote:

"A key aspect of the iPhone's ability to provide a great user experience is the integration between the hardware and the software running on the device. While all of the Android devices currently on the market offer some level of integration with Google services (mostly search, maps, etc.), we believe GOOG envisions a much tighter level of integration with all of its current as well as upcoming services for mobile computing."

After reading that why as a consumer would I want to buy a Droid when Google could be developing a device that would be Google's definitive answer to the iPhone?

The Droid Purchasing Dilemma

Well, one obvious answer is that such a device does not yet exist and if I want a new phone now, I might as well buy the Droid my heart was set on in the first place. A so-called Google phone may not appear on the market for six months, a year, if at all.

Another answer is the phone could be inferior to current devices. Just because Google may be building an Android phone in the tightly controlled, integrated vein, does not automatically make the device equal or superior to the iPhone, which pleases anyone from high-tech pros to grandmothers.

Yet against that integrated grain is another valid concern: the currently hodge podge, open source nature of Android. When Android was unveiled in November 2007, reception was mixed. Open source enthusiasts praised it as a liberator and field leveler of the largely proprietary mobile OS world manned by iPhone, Windows Mobile, RIM and Palm.

Others said Android could go the route of Sun's Java Platform, Micro Edition, fracturing the mobile OS market even further. Two years later, those fears look prescient.

Android developers are saying having three versions of the OS -- Android 1.5, 1.6 and 2.0 -- kicking around is a problem. Having custom firmware on phones and hardware differences between different gadgets is also problematic.

Tech-savvy consumers have already noticed this. A Google phone, being built from the bottom up with Google might alleviate some of the kludge issues, as McKechnie noted:

"By controlling all aspects of the phone, Google could create a mobile ecosystem where all of its various services/applications run seamlessly and are easily accessible by the user. Clearly, this means enabling more mobile searches, but a "Google phone" would also likely include tighter integration with Google Voice, GPS-enabled directions and mapping, location-based mobile advertising, Google Checkout (currently the only accepted payment platform in the Android apps market), and many other current and future Google services."

So more than ever, I need to ask: is it worth it for me as a consumer needing a new phone to hold off to see if the rumor holds true? I haven't decided.

All of this makes me wonder: how much business is the Google Phone rumor costing the current Android phone makers? How many others out there like me have hit the pause button on their purchasing plans because of the promise of a Google phone that could rival the iPhone?

None of this can make Google's Android partners very happy, particularly coming during the holiday buying season. Imagine if Apple secretly ignited these rumors to stymie sales of existing Android phones? That would be some great gamesmanship. 

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