Verizon’s Nightmare

The Google business model is to sell advertising.  If you make your money from advertising, you can afford to subsidize the delivery method.  The extra-thick Sunday paper only costs a buck, for example.  Broadcast TV shows are free so long as the commercials are packaged with them.
Google already owns browser based search advertising. 

The mobile market is a natural one to exploit.  How do you get mobile users to watch your ads?  Give them a phone!  But giving away phones only makes sense if

  1. Your ad-hungry mobile users will see your ads preferentially and
  2. They can afford the air time

How to solve these problems?  Buy your own slice of the spectrum and let folks connect for free.  Construct a low-cost, but cool looking phone tweaked to use your services.  Like so:

Google is interested in spectrum auction, but needs to study first – Tech

“We are still very interested in the auction,” Chris Sacca, Google’s VP of special projects said, but he did not give details telling Dow Jones that he did not want to reveal any details of Google’s strategy to potential rivals. The mention of the rivals adds another interesting twist. Dow Jones said that the FCC set the ground for a bidding war. The warriors, according to their report, are companies like Google, Yahoo, eBay, and Intel.

Report: Google shows phone prototype to vendors

August 02, 2007 (IDG News Service) — Google Inc. has developed a prototype cell phone that could reach markets within a year, and plans to offer consumers free subscriptions by bundling advertisements with its search engine, e-mail and Web browser software applications, according to a story published Thursday in The Wall Street Journal. Google is showing the prototype to cell phone manufacturers and network operators as it continues to hone the technical specifications that will allow the phone to offer a better mobile Web browsing experience than current products, the Journal said.

But wait!  How do you ensure rapid geographical coverage without building cell towers or leasing towers?  Femtocells perhaps?

And what about people who bought expensive iPhones?  Wouldn’t they like some free connectivity?  Sure they would.  If only there were  Google apps  on the iPhone … or if the iPhone wasn’t tied  to AT&T … Why, if those things were true then who wouldn’t pay a little more for a classy video iPod with free voice and internet connectivity for life (or at least for the life of the battery)? 

So, if you’re Verizon and your cell phone subscribers evaporate in favor of a free service…and your land line business dries up as everyone goes wireless…what to do?  You’d crank up the rates on DSL and FiOS … perhaps even try to block some femtocell traffic to staunch the hemorrhaging.  Surely Google would never think to protect itself from this tactic by trying to build its own internet…offer the internet service  for free and starve Verizon for oxygen? 

Maybe.  If Google crushes Verizon, captures the mobile market and guzzles the sweet nectar of mobile advertising…I wonder who will sell their customers ringtones?

Update:

Note that Verizon is not amused …

VOIP IP Telephony: Google Phone coming soon!

The Journal said on Thursday Google had also approached the two biggest U.S. wireless services, AT&T Inc and Verizon Wireless, in recent months to ask them to sell phones with Google service.

It cited a Verizon Wireless executive saying the company had decided not to integrate Google’s Web search tightly into its phones because of Google’s advertising revenue-sharing demands. The newspaper said the executive had not commented on a Google phone.


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Published in: on August 3, 2007 at 8:08 pm  Comments (1)  

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  1. […] Verizon’s iPhone Clone Its not just a way to keep Apple fans from heading to AT&T.  Its a move to manage the risk of the GPhone. […]


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