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It’s Google vs Microsoft in the war of the cellphone programs

It’s Google vs Microsoft in the war of the cellphone programs
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First Published: Thu, Mar 27 2008. 12 51 AM IST

The next cool app: Android, which is based on Linux, is meshed with Google’s culture of openness.
The next cool app: Android, which is based on Linux, is meshed with Google’s culture of openness.
Updated: Thu, Mar 27 2008. 12 51 AM IST
San Francisco: On a chilly February morning, Andy Rubin hustles past equation-filled whiteboards in a two-storeyed building on Google Inc.’s Silicon Valley campus.
Rubin, a computer scientist who builds robots for fun, has spent three years in this top-secret sanctum of the Googleplex. He’s putting the final touches to one of the most ambitious projects the Internet juggernaut has ever undertaken: an operating system for cellular phones that’s designed to give Google the same grip on the mobile Web that it commands in online searches on personal computers (PCs).
The next cool app: Android, which is based on Linux, is meshed with Google’s culture of openness.
“We’ve gotten to the point where anyone can build a cellphone,” says Rubin, 44, dressed in blue jeans and a red crewneck T-shirt as he explains why Google is piling into wireless, the Internet’s new frontier. “What’s important now is software having the next cool application.”
After luring an audience that tops 588 million people who search in more than 200 languages and winning 72% of the $22.5 billion (Rs90,225 crore) in annual advertising linked to Web queries, Google founders Sergey Brin and Larry Page are hunting beyond the PC for growth. Fewer googlers are clicking on the text ads that run alongside Google’s search results, threatening the area that generated most of the company’s $16.6 billion in 2007 sales.
Turning to telecom
Turning to telecom won’t make Google’s life any easier. Microsoft Corp. already enjoys 21% of the US market for mobile operating systems. Winning Yahoo would give the software giant the most popular site on the mobile Internet, with 28 million combined subscribers, according to M:Metrics Inc., a Seattle-based research firm. That compares with Google’s 14.5 million.
Meanwhile, the phone companies that control the wireless networks aren’t likely to bow to Google at the expense of Apple Inc.’s iPhone and other hot products. Ralph de la Vega, CEO of AT&T Inc.’s wireless division says a so-called “Google phone” could likely become just one of the many offerings in AT&T stores.
Ultimately, Brin and Page haven’t proved they can do anything else as well as they do search, says Laura Martin, an equity analyst at New York-based Soleil Securities Corp. who rates Google stock a “hold” because she’s wary about whether the company can keep growing as it has.
“Despite relentless product introductions, the only one that’s been a proven economic success is search,” Martin says.
Winning on the mobile Web, one of the biggest and potentially most lucrative Internet markets, would take Google far in erasing such doubts. There are more than 3.3 billion cellphones worldwide, about one for every two people on the planet. By 2010, that’s expected to jump to four billion, or triple the number of PCs, says research firm Gartner Inc.
Brin and Page want the first page callers see on these phones to be Google’s. From there, users would tap Google software to surf for information, email friends, watch videos and find the nearest deli, just like they do on PCs.
“It should be possible that the primary place you search would be a mobile device,” says Google CEO Eric Schmidt.
Schmidt’s prediction puts the spotlight on Rubin and his team of engineers, and their operating system called Android, which is set to hit the market this summer. Unlike Microsoft, which licenses Windows Mobile to handset manufacturers, Google plans to give Android to scores of cellphone makers and service providers. It has formed the Open Handset Alliance with more than 30 phone manufacturers, carriers and chipmakers to support Android. Among them are Motorola Inc. and Japanese carrier NTT DoCoMo Inc.
“The cellphone is where it’s all moving, and Google has to get into that,” says Rich Redelfs, a venture capitalist at Foundation Capital in Menlo Park, California, who invests in wireless technology firms. “...Google wants to create an operating system that can go across handsets and give them a stronghold.” If any other newcomer set out to shake up the mobile world as Google is doing, telecom veterans would dismiss it out of hand, says Richard Wong, a venture capitalist at Accel Partners, in Palo Alto. Google isn’t any company. It’s a force so synonymous with the Internet that the Oxford English Dictionary recognizes Google as a verb. A decade after its founding, Google, with its market value of $141 billion, is the valley’s byword for wealth and buzz.
‘Really big fights’
Cracking the $135 billion US wireless industry will be tough, even for Google. The market is more entrenched and better defended by incumbents Verizon Communications Inc. and AT&T than the wired Internet, Accel’s Wong says.
BlackBerry maker Research In Motion Ltd, Palm Inc. and now Apple are duelling for customers. Finnish phone giant Nokia Oyj owns 48% of Symbian Ltd, a London-based software firm that commands almost two-thirds of the global market for mobile operating systems. Then there’s Microsoft, whose Windows Mobile runs gadgets offered by 160 phone firms in 55 countries.
“Google is picking some really big fights,” says David Helfrich, a partner at Garnett and Helfrich Capital, a San Mateo, California-based technology buyout firm.
Microsoft may release the seventh generation of Windows Mobile this year, just as Android makes its debut. “Microsoft versus Google: that’s the battle that’s coming in mobile,” Terry Garnett, Helfrich’s partner, says.
A potential Microsoft-Yahoo combination is turning up the pressure for Rubin to make Android deliver in mobile. Leaning forward at a conference table in Google’s mobile technology lab, he says Android will use “end-to-end connectivity” to make phones “intelligent.” Translation: Android will let mobile users constantly update their phones by downloading thousands of different programs, from games to social networks to videos.
Rubin and three colleagues co-founded Android Inc. in 2004. As it happened, Brin, Page and Schmidt were also convinced the time was right to jump into mobile.
Rubin had first met Brin and Page at a lecture he gave on mobile technology at Stanford in 2002. In a series of sit-downs with Page in early summer 2005, Rubin described how his open operating system would attract consumers by using the Internet to provide scores of different applications. That meshed with the trio’s main concern, Rubin says. If the phone companies weren’t going to create a better mobile Web experience, then Google would do it.
Google’s brain trust saw Android as a lever to shimmy open the carriers’ networks. If consumers were to fall in love with an Android-powered Google phone because of its ability to constantly be updated with new features, the carriers would have little choice but to make the phone available. Rubin says Brin, Page and Schmidt saw Android as a way to level the playing field.
In July 2005, Google acquired Android Inc. for an undisclosed amount.
Rubin’s plan for Android meshed with Google’s culture of openness. From the outset, he based Android on Linux, a freely available software code that programmers embrace as an alternative to proprietary operating systems. By using Linux, Rubin hopes independent programmers, from seasoned software pros to pizza-chomping college students, will create hundreds of applications to run on Android. That should make Android-powered phones a hit with consumers and advertisers.
As Google’s teams prepare for Android’s roll-out, rivals are going into attack mode. Microsoft is working on improvements to Windows Mobile. Ira Snyder runs the Windows Mobile development lab on Microsoft’s Redmond, Washington, campus. A computer scientist who uses phrases such as “wicked cool” to describe good ideas, Snyder, 40, says understanding how consumers use phones is key.
“Our job is to make the phone more personal, make it a richer experience. So, we just pull people off the street and ask them questions.”
Scott Horn, general manager of marketing in Microsoft’s mobile communications group, says Google may be in for a rude surprise given the technical difficulty of making software for devices as small as mobile phones. “Our resources are considerable and it’s taken us years to ramp up. It will be interesting to see how Google meets the challenge.”
One way Google is trying to gain traction is by taking its fight to Washington. In July, it helped persuade the Federal Communications Commission (FCC) to require open access for airwaves that went up for auction in January. The winner of a block of the 700MHz spectrum must open it to whatever legal device or applications consumers care to use.
At first, the two largest American carriers, AT&T’s wireless unit and Verizon Wireless, owned by Verizon Communications and Newbury, England-based Vodafone Group Plc., opposed open access. In November, Verizon Wireless reversed its position and announced it would open its network. On 20 March, FCC announced that Verizon had won the auction for the open access block of spectrum and would pay $9.36 billion to use those and other airwaves.
Phone carriers aren’t going to let Google turn their world upside down, says Richard Nespola, CEO of Overland Park, Kansas-based Management Network Group Inc., which advises telecommunications companies. “Google’s done an outstanding job of forcing the industry to recognize what’s next, but the carriers win anyway,” Nespola says. “They control the network....”
But Google doesn’t want to simply elbow its way in as one option in a crowded marketplace. Confident in their ability to out-engineer anyone, Brin, Page, Rubin and Schmidt have set out to change the wireless industry so it revolves around Google.
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First Published: Thu, Mar 27 2008. 12 51 AM IST