Google Goes Mobile With "Android"


Another big day for Google and its shareholders, thanks to Sanford C. Bernstein and its new $850 target on the stock. This of course comes a week after David Garrity at Dinosaur Research unleashed a $985 target. And Google shares are once again off to the races following the company's unveiling of its mobile initiative.

As we've said all along, there is no gPhone, and likely won't be a gPhone. An exclusive device branded by Google FOR Google never made sense and simply doesn't follow the company's oft-stated goal of getting its products in front of as many people as possible. And now we have the clearest indication yet just how the company plans to do that.

The Open Handset Alliance will include 34 handset makers, technology developers and carriers. Among them: Qualcomm , Motorola ,NTT DoCoMo,Telefonica,LG, and Samsung. Google will offer up something called the Android Mobile Software Stack, an integrated family of software including an operating system and new mobile applications.

The idea here is to mirror on the handset what we all already enjoy on the desktop: Go to the web on a Dell, HP, Lenovo, even Apple computer and your experience is largely the same from one site to the next. Access the web using your BlackBerry, Palm, Motorola, or iPhone and sites can look very different from one to the next. Google wants to change all that. Microsoft has been trying, but its vision has been way to limited.

And that's why Android poses so many opportunities; and why Google shares will continue to climb. Microsoft had a nice business model for the last tech revolution: create the operating system and make a fortune from licensing fees and new compatible applications. Own the desktop, and you can own the world.

But the world is changing. iPhone might be the best, albeit nascent, example of that. The world is going mobile. The globe will buy about 250 million PCs this year and 1 Billion handsets. The writing is on the wall and Google is staking its claim in that mobile future. This new alliance is a kind of digital "call to arms."

I have written before how important Google's mobile initiatives are. Now Cowen suggests this might be a $1 billion revenue stream for the company by 2010, though a tiny percentage of the company's expected $27 billion in revenue by then. But this is a strategy for the long-term. Yes, Google is putting the puzzle pieces in place to become the Microsoft of the new, mobile generation.

But unlike Microsoft, Google won't make its money from licensing. It'll make money from the advertising that's also going mobile. That's a compelling business strategy for tech makers, like the ultra-competitive handset makers who fight for every single operating margin point. Partner up with Google for free and share the advertising the deal generates.

Before you scoff at just how much advertising there is to make something like this lucrative, consider that advertising goes where the consumer goes. And the consumer is clearly going mobile.

And this technology could offer "targeted" advertising that goes right to the consumer no matter where that consumer is. Facebook wants to be there. Yahoo wants to be there. MySpace and News Corp want to be there. But Google might get there first, with the chops to make its initiatives far more compelling than all the others. Advertisers see it too. Ads for mobile devices already command a 2x premium over the ones that appear on PCs.

GPhone be damned. Google's got a far broader, far deeper, far wider strategy for consumers. The gPhone is a trinket. Google is building an empire.

Questions? Comments?