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When Sprint Nextel and Clearwire announced Nov. 9 that they were abandoning their WiMax partnership, many people speculated that Clearwire might pick up with Google.
After all, the search vendor has demonstrated quite the wireless itch of late, with its mobile social networking purchases and Android platform.
But by the time the weekend rolled around, the rumors bubbled over, the blogosphere lost its head and some industry watchers claimed Google could go for Sprint, the No. 3 U.S. wireless network carrier with a $45 billion market capitalization.
A Google acquisition of Sprint could be disastrous for a company that has worked so hard to build up its search and online advertising business, according to analysts.
Click here to read more about Googles Android platform.
“It would probably be suicidal,” said Enderle Group analyst Rob Enderle, noting that the cultural differences alone would be a never-ending nightmare that would recall such disastrous past mergers of AT&T and NCR or IBM and ROLM.
Google, of Mountain View, Calif., is a high-tech company for the new millennium, relying on bringing people Internet content to make money. Sprint, of Reston, Va., is an old-line nuts and guts phone carrier looking to build a wireless network.
Yes, Google is looking to build out its wireless services so that it might target the mobile user with advertising, and, yes, Google and Sprint are already partnered to provide WiMax services. These factors alone might make a merger between the search giant and Sprint look like a Reeses peanut butter cup by comparison.
However, these companies appear to be heading off to separate poles. Google is stable, soaring high on the wings of a $200 billion market cap; Sprint is in flux in the wake of the loss of its Clearwire WiMax deal and the departure of its CEO.
Further complicating the cake mix is that Sprint is also part of the newly-announced Open Handset Alliance, or OHA, an initiative to build an open mobile ecosystem around Googles Android platform.
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By purchasing Sprint, Google could scare some of the thirty-something OHA members that are already a little leery that Google could try to expand its sphere of influence in a group promoting openness. There would be concern that Google would ensure Android wouldnt run on products from AT&T, Verizon, Vodafone, or any of the other carriers in the market.
“I would think that Google buying Sprint would create a big mess for Google,” Yankee Group analyst Zeus Kerravala told eWEEK. “Sure they would get the wireless network but its a network in transition as [Sprint] still has an iDEN and CDMA network.”
Whatever the case against a Google-Sprint union, there is no denying the strength Google might have if it acquires Sprint and some 700 MHz wireless spectrum when it becomes available in January. But rationalizing and executing both would be “incredibly nasty,” Enderle said.
Matt Booth, senior vice president and program director at The Kelsey Group, doesnt like the notion of Google going after Sprint either, so he decided to have a little fun with it, saying he would rather see Google target Yahoo and Intuit if it wants to be aggressive.
Read more here about the mobile wars.
“You could basically get both Yahoo [$34.4 billion] and Intuit [$10.1 billion] for the price of Sprint,” Booth told eWEEK. “Wouldnt you rather get Yahoo, its portal and 400 million users plus and 87 percent share of the small- to medium-sized business market with Intuit? Sprint seems like a reach to me.”
All kidding aside, Booth said Google would be better off putting its software out in the market and making deals with carriers, or even starting its own network.
Maybe Google didnt do anything specific to start the Sprint rumor but its overall behavior—branching out from search and ads to apps and wireless services—makes one wonder: what are its limits? Could Google be feeling the oats of omnipotence?
“The only reason youd do this is because you believed you could, either organically or through additional acquisitions, become so dominant that the other carriers wouldnt matter,” Enderle said, adding that Googles omnipotence could make this deal a real possibility.
However, Enderle also said Google may well realize the risks appear to exceed the likely benefits.
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