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Google, the cellphone industry's newest player

Text by Sébastian SEIBT

Latest update : 2008-11-10

Launched on October 22, the Google Phone is making its debut in the US mobile phone market. By incorporating its search engine technology to cellphones, Google has oriented its development strategy in a whole new direction.

The saying "Google is everywhere" seems all the more true now that the company has launched its all-new “Google Phone,” the first cell phone to be equipped with the company’s new mobile platform, Android. “Google defines itself as an information company, and since information is everywhere, nothing prevents it from spreading to all sorts of markets,” explains Jonathan Briggs, professor of e-commerce at the University of Kingston, in London.

 

With its now ubiquitous search engine and its star applications, such as Gmail, the video sharing site YouTube and the new Web browser Chrome, the Mountain View-based group is clearly an Internet heavyweight. Its omnipresence on the Web allowed Google to reap in a net benefit of 4.03 billion dollars in just one year. Now, the company is looking for new markets to expand into. “96% of Google’s revenues are generated by advertisements. It needs to remain the first Web service provider to attract advertising clients. Wall Street expects Google to keep getting bigger; failing to do so would surely cause its downfall,” predicts Ralf Kaumanns, author of “How Google changed the economy”. “You can make more money with cell phones than with computers,” Google CEO Eric Schmidt told CNBC.

 
'Generation Google'
 

On the road to exponential growth, however, Google came across an increasing number of competitors. And not just anybody: in the late 1990s, its search engine overpowered the well established Altavista. Google then tackled the goliath Microsoft, offering a growing number of free online alternatives to Window’s expensive software.

 

Last but not least, Google launched its Web browser Chrome last September, challenging Microsoft’s Internet Explorer on its own turf - a market where it owns a whopping 73% share. Will the Google Phone also be a cloud in the Iphone’s otherwise spotless sky? Ralf Kaumann isn’t sure: “At first, it will be a gentleman’s war, each party taking advantage of the other’s innovations to improve its product.” But in the end, there will have to be a final battle, with a clear winner and loser. “It’s the classic format war. First there was the IBM generation, then Microsoft became n°1, and now the question is: will Google be the next Microsoft?” he adds.

 
Open Source
 

Will Gmail become the most popular emailing system, Chrome the unavoidable Web browser and Android the must-have application for all cellphones? Google’s advantage is that it is based on software that is both free and partly Open Source, meaning that it can be freely modified by users. “We are one of the industry’s biggest providers in Open Source applications, we offer nearly forty today,” says a Google France manager. “Google may be criticized, but it’s clear that their products improved users' Web experience, and have been fully adopted by the community,” acknowledges Ralf Kaumanns.

 

Nonetheless, Google’s tightening grip over many facets of the Internet does raise some concerns. “Google is increasingly compared to a modern-day Microsoft” remarks Jonathan Briggs. Many don’t agree with this parallel: “Unlike Microsoft, Google hasn’t faced any anti-trust lawsuits in its 10-year existence” remarks Daniel Glazman, former Netscape programmer.

 

Concern over Google’s expansion stems mainly from the very nature of its business: information. In exchange for the seemingly infinite mass of information delivered by Google, the company is gathering more and more data on those who use its Web services. “For now everyone has been helping themselves at this marvelous all-you-can-eat buffet,” says Jonathan Briggs. “But one day we’ll realize that in fact everything comes at a price”.

Date created : 2008-10-29

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