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Google: Is gPhone Dialing Up Once Again?

Thursday, 2 Aug 2007 | 3:58 PM ET
A gPhone in the future?
CNBC.com photo composite
A gPhone in the future?

Here we go again--when it comes to all the speculation swirling around whether Google will jump into the cell phone market, not with new software, but with a handset of its own.

To wit, we've already reported the myriad possibilities and puzzle pieces pointing to a possible cell-phone market entry by the search giant. More than a hundred engineers dedicated to the mobile market; the hiring of Danger Inc. co-founder and T-Mobile Sidekick developer Andy Rubin; the acquisition of wireless and net upstart Grand Central; the lead role the company took in laying down the ground rules of the upcoming FCC wireless spectrum auction; its cozy partnership with Apple and its iPhone, with Google CEO Eric Schmidt sitting on Apple's board.

Which brings us to today and the front page story by our partners at the Wall Street Journal waxing philosophic about just how truly possible a "gPhone" is. But the Journal mentions several compelling new developments: that Google has developed prototype handsets; that the company has opened discussions, preliminary though they are, with Verizon and T-Mobile (did I mention the Rubin hiring?); and the spending of "hundreds of millions of dollars" on focused mobile spending.

There's a lot going on here. Seems like everyone recognizes the importance of wireless as the key catalyst in tech. Nokia released earnings today and the company announces that it sold 100 million handsets over the last quarter alone. That's a staggering figure, and with BlackBerry's continued success even in the face of the buzz iPhone still generates, the wireless market might be so hot that Google won't be able to afford to ignore it. Remember, that was the same argument used to convince everyone that Apple was entering the mobile market.

"If the wireless access growth really grows aggressively, which we really haven't seen much growth there to date, there is an opportunity for Google to monetize that," says Cowen's Jim Friedland.

Google Phone
Discussing Google's handset-initiatives, with CNBC's Jim Goldman

When it comes to wireless, Google has made no bones about ponying up the funds to own spectrum and build out a network. The company's VP in charge of its wireless initiatives, Chris Sacca, tells me: "What do we have to do to insure Americans have choice of where they go on the internet, and make sure the internet is accessible to the broadest number of people possible." He says "we'll do what it takes," with the company already announcing it would spend nearly $5 billion to own a wireless spectrum. That's all network-oriented.

A handset is a different animal, though insiders at Google I'm talking to won't completely rule it out. However, they do say it's a long shot. Sniffing around; playing around; toying with different technologies. That's what Google does with its multi-billion dollar R&D budget. Something might come of it; or not. But before you jump to a gPhone as a forgone conclusion, keep in mind that Google is a software company. Like Microsoft . And we haven't seen Microsoft release a branded PC of its own. And Xbox, Microsoft's big foray into hardware, has lost about $4 billion.

Google hasn't learned much from Microsoft, but that's a lesson the search giant should keep handy.

Questions? Comments? TechCheck@cnbc.com

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