By Jeffry Bartash
Already a fixture on most computers, Google Inc. (GOOG) has taken an important step to become a mainstay on wireless phones, too. In a potentially big breakthrough, Verizon Wireless said this past week that it would use Google's Android software on some of its devices, while unconfirmed reports indicate the Internet-search giant could soon enter a relationship with AT&T Inc. (T) Verizon Wireless and AT&T are the two largest mobile-phone companies in the U.S., with more than 160 million customers combined. Google has been trying for several years to get the companies to adopt Android, an operating system designed to make wireless phones very easy to use. The goal of Google is not necessarily to make money from the software, but to extend its presence beyond the world's roughly 2 billion Internet-connected computers. As more Internet traffic shifts to wireless networks, Google wants to make sure people are using its software on mobile devices. "They want to lock people into the Google world," said wireless analyst Tero Kuittinen of MKM Partners, a boutique broker-dealer. "They are literally giving Android away." Google makes most of its money by placing ads in Internet-search results that closely relate to the information Web users are seeking. If a user were looking up the history of peanuts, for example, Google search results would also list the sites of companies that sell peanuts. The company would like to replicate that search-advertising model on wireless phones. Another potential source of revenue could come when phone users download applications that work with the Android software. Making inroads Until recently, Google's success in the wireless business was slow and halting. Yet its effort began to gain momentum late last year when T-Mobile USA Inc. released the first Android-based device. And earlier this year Motorola Inc. (MOT) said it would feature Android in its next generation of mobile phones. Within the next few days, Sprint Nextel Corp. (S) plans to start selling its first Android-based phone, the HTC Hero, and Verizon Wireless will follow suit shortly after with two Android devices. Verizon Wireless is owned by Verizon Communications Inc. (VZ) and U.K.-based Vodafone Group plc (VOD). In the near future, AT&T reportedly will climb aboard the bandwagon with an Android smartphone developed by computer maker Dell Inc. (DELL), according to The Wall Street Journal. That would give Google a foothold with the four largest U.S. wireless carriers. The brokerage Stifel Nicolaus now estimates 30 Android-based phones - about 50% more than anticipated - will become available in the U.S. and overseas by the end of 2009. "We continue to believe that additional Android-powered devices, additional wireless carriers and additional applications will likely lead to market share gains for Android," analyst George Askew wrote in a report. Why the sudden explosion of new devices? Ken Dulaney, vice president of the market-research firm Gartner, gives the latest version of Android high marks and said it outshines Apple's software in some areas, though it lacks all of the iPhone's functions. Google has repeatedly updated Android after adding improvements and refinements. Then there's the cool factor. "Does it have buzz? Is it what people want?" Dulaney said. "Phone companies want lots of great things in the store to make you come in." Carriers have other motives to adopt Android, analysts say, such as reducing their dependence on any one supplier. They also want to have more influence over the design of software used on their devices and thereby increase opportunities for profit. With its low licensing costs and seemingly limitless customization, Android caters to those needs. Yet it took awhile for carriers to adopt a move toward open software because it means giving up some control over what customers do with their devices. Android allows any software developer to create applications - games, music, business tools - than can work on an Android phone no matter which carrier sells it. Google Chief Executive Eric Schmidt said he was taken aback by Verizon's more open approach once negotiations began 18 months ago. "We did not know that until we spent a lot of time getting to know each other that they would also take a leadership position on openness, which was frankly enormously surprising given the history and nature" of phone companies, he said. Market Grab Building on Android's fresh momentum, Gartner forecasts that Google's mobile- operating system could capture 14% of the market by 2012 and jump into second place. Right now Nokia Corp. (NOK) is the clear market leader with nearly 50%, followed by Research In Motion Ltd. (RIMM), Apple Inc. (AAPL) and Microsoft Corp. (MSFT). Market share for those three companies range between 10% to 15%. Other analysts, however, note that Nokia and Microsoft are planning their own major software upgrades that could help them counter the challenge from Google. Kuittinen of MKM Partners also said the new phones powered by Google's Android have to get much cheaper to make the software a mass-market success. Most of the early Android devices are high-end smartphones costing several hundred dollars. "The first wave of Android phones has been disappointingly high priced," he said. The phone companies, meanwhile, remain committed to working with other software suppliers and have no plans to dump them. There's plenty of growth to go around since the wireless Internet is relatively young, they say. "We have a lot of very valuable partners here," said John Stratton, chief marketing officer of Verizon Wireless, "so we don't see expanding business opportunities with one as necessarily taking away from the other. That suggest it's kind of a zero-sum game here." -Jeffry Bartash; 415-439-6400; [email protected] http://online.wsj.com/article/BT-CO-20091009-712596.html -- Salam, Agus Hamonangan [email protected] http://groups.google.com/group/id-gtug/ http://groups.google.com/group/id-android/ --~--~---------~--~----~------------~-------~--~----~ Google Groups "Indonesian Android Community [id-android]" group. 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