Through The Fly's Eyes: Google, Microsoft, and Apple
from Larry Ramer of Theflyonthewall.com
The gPhone May Sting Microsoft and Apple
In the long run, Google’s (GOOG) rumored gPhone may hurt Microsoft (MSFT) almost as much as it hurts Apple (AAPL). According to an article in today’s International Herald Tribune, Google’s motive in developing the gPhone is to create software for cellular phones that will be an alternative to current cellular operating systems.
Google’s entrance into the cellular phone operating system market could potentially reduce Microsoft’s revenue. While only 12 million phones with the company’s Windows Mobile operating system were sold last year, that number has been growing rapidly each year. The number of phones running Windows Mobile doubled from the end of 2005 to the end of last year. With only 10% of a rapidly growing market, Windows Mobile had a chance to become a really significant growth engine for Microsoft (one of the company’s few), but Google’s operating system may eliminate that possibility.
Unlike Microsoft, Google is not expected to charge cellular carriers a licensing fee to run its mobile software. Instead, Google plans to rely on advertising that appears on the phones’ screens to profit from the project. And if Google can enhance the mobile Internet experience, cell phone companies will have another reason to use Google’s operating system instead of Windows Mobile.
Indeed, 45% of people polled by The Kelsey Group indicated that they would look for better mobile Internet capabilities on their next cell phone. So, even though Google is not directly targeting iPhone users, the gPhone may wind up pulling some of them away, if it can offer better Internet capabilities. On the other hand, many iPhone users could be turned off by the advertising on the gPhone, and its look, which is reportedly less snazzy than the iPhone.
But, in any case, Microsoft's Windows Mobile looks like it may be somewhat endangered by Google’s impending move into the mobile Internet.