Google, the most popular Internet search engine, last week gave employees an Android handset for testing. The device has a touch screen like the iPhone, and users can search the Web by speaking search terms.
Google is focusing on the mobile market as growth in its search-advertising business on desktop computers slows. Phone makers such as Motorola Inc. and HTC Corp. already offer handsets that run on Google’s Android operating system. Having its own device gives Google more control over how the hardware and software works together, and intensifies competition for Apple, said Ben Schachter, an analyst at San Francisco-based Broadpoint AmTech Inc.
“If all of a sudden everyone is getting on the Internet via their mobile device, Google needs to make sure it has an influence on that,” Schachter said yesterday in an interview. “They need to make sure they have influence on how the mobile Web will develop.” He recommends buying Google stock and doesn’t own it.
The Android phone, made by Taoyuan, Taiwan-based HTC, may be available for consumers as early as next year, the Wall Street Journal reported. No carrier has been announced for the device.
Mobile Advertising
Creating its own handset reflects Google’s effort to expand advertising sales on mobile devices, a market that may grow to $2 billion to $3 billion by 2013 in the U.S., up from less than $1 billion now, according to Sanford C. Bernstein & Co. In November, Google announced plans to pay $750 million for AdMob Inc., a mobile-phone advertising startup backed by Google investor Sequoia Capital.
Google, based in Mountain View, California, first disclosed that it was working on a phone in a blog posting on Dec. 12, saying that employees were using the device to provide feedback.
“At Google, we are constantly experimenting with new products and technologies, and often ask employees to test these products for quick feedback and suggestions for improvements,” Google said. “We recently came up with the concept of a mobile lab, which is a device that combines innovative hardware from a partner with software that runs on Android to experiment with new mobile features and capabilities.”
Katie Watson, a spokeswoman for Google, declined to comment beyond the blog posting. HTC Chief Financial Officer Cheng Hui- ming, and public relations official Maggie Cheng didn’t answer calls.
More Google Searches
If the handset sells well, it would push more people to use Google when searching from their phones, said Aaron Kessler, an analyst with Kaufman Brothers LP in San Francisco. The number of mobile searches grew 30 percent in the third quarter from the previous three months, Google Chief Executive Officer Eric Schmidt said on a call for analysts in October.
Apple’s iPhone models were the second and third most popular consumer smart phones last quarter, according to research firm NPD Group Inc. RIM’s BlackBerry Curve 8300 lineup took first place. The newest iPhone, the 3GS, sold more than 1 million units in its opening weekend in June. Natalie Kerris, a spokeswoman for Cupertino, California- based Apple, declined to comment. Marisa Conway, a spokeswoman for Waterloo, Ontario-based Research In Motion, didn’t immediately return a phone message seeking comment.
Users Lure Developers
Google needs to attract more consumers to Android phones to spur developers to create applications, said Jeffrey Lindsay, an analyst with Sanford C. Bernstein in New York. There are more than 100,000 applications available for the iPhone, while Android has more than 12,000.
“The guy who gets biggest fastest gets the most developers,” Lindsay said. “It’s a fight for scale.”
Google slipped 0.2 percent to $590.51 in Nasdaq Stock Market trading on Dec. 11. The shares have gained 92 percent year. Apple, which has more than doubled in 2009, fell 0.9 percent to $194.67.
Google may use the device as a way to show other manufacturers and wireless carriers the possibilities of mobile computing, Schachter said. The company could use its Google.com site to sell the Android phone, just as Amazon.com Inc. used its home page to help increase sales of the Kindle electronic book reader, he said.
“Let’s say it’s not a major success -- then it shows what’s possible,” Schachter said. “They want to have a very powerful seat at the table.”
Motorola Droid
Google and T-Mobile USA Inc. introduced the first Android phone in September 2008, a bid to lure consumers away from the iPhone and BlackBerry. Last month, Schaumburg, Illinois-based Motorola introduced the Droid phone, which can run multiple applications at once and features voice-driven Web searches.
Google’s phone may be “unlocked,” meaning that it wouldn’t be tied to a specific phone network. Customers would then have to sign up for wireless service from a carrier.
T-Mobile and AT&T Inc., the wireless partner for the iPhone in the U.S., offer service plans for unlocked devices. Michael Coe, a spokesman for Dallas-based AT&T, and Peter Dobrow, a spokesman for T-Mobile, declined to comment. Verizon Wireless spokesman Jeffrey Nelson and Sprint Nextel Corp. spokeswoman Michelle Leff Mermelstein didn’t return phone and e-mail messages.
Google has the opportunity to kick start demand for Android phones, even if Apple’s iPhone still dominates, Lindsay said.
“They’ve put all the conditions in place to succeed,” said Lindsay, who rates Google “outperform” and doesn’t own the stock. “Still, Apple’s got the edge.”
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