The Google phone – friend or foe?

Google has finally launched what was expected since the Android rumours started in 2005 – its first own-branded phone. This is not a surprising move – these days, there is a wide choice of device vendors designing, branding, manufacturing and shipping smartphones built-to-order. Although Google claims that it just intends to further improve mobile access to its services and push its ad-based business model – the profits expected in the smartphone business are too promising to be left to the big handset players, and Google’s effort to test the attractiveness of its consumer brand on a physical product is a logical step.

But what comes next for the company that is slowly entering more and more areas of our lives? First, selling the new device through more channels, and to additional target groups. Channels: More operators and distributors, high street retailers and online shops. Target groups: Business and enterprise users with special software and integration, and consumers beyond the early adopters, attracted by the comfort of accessing all their Google services (search, email, videos, photos, maps etc.) on the go.

Then, launching additional own-branded devices (low-end smartphone, tablet PC, e-book reader etc.) should Google find out that this helps them reaching new segments compared to the option of leaving device sales to partner companies. Furthermore, having opened its own online store opens up possibilities to also charge consumers for Google services, possibly coupled with wireless access procured through mobile operator data wholesale arrangements.

Mobile operators will continue partnering with Google, but they have to balance the short-term data ARPU advantages with other considerations. In addition to Google, there are often other online service providers available for partnerships, including smaller, national players that are dominant in their market. Secondly, Google’s public perception is changing, and operators need to avoid misalignment with their own brand image. Thirdly, potential conflicts in areas such as device portfolios, user data management and CRM must be managed – or operators may end up partnering with a company that knows more about their users than they, the operators, do.

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