UPDATE: Here is a new article talking about Google’s desire to develop the OS and not the hardware. I think many of my thoughts are still valid as the OS is obviously a critical part of any phone.
While it is impossible at this point to determine whether Google is actually developing their own phone or not, such a development would certainly have much to offer consumers and, in turn, Google. Ive spoken about the significant restrictions that most wireless providers have placed on their phones previously. These providers want to create a monopoly over the applications that use their network. From a simplistic business point of view, you can see the logic. For example, why let people use the music they currently own for ring tones when you can charge them $2.50 for virtually the same thing by enacting strict controls over the hardware functions.
The rumors on the GPhone are that it will be Linux based and be an open platform unlike the iPhone. For consumers, the benefits are obvious. An open platform would create a new outlet for open source developers. Such a platform would also allow firms with proprietary software to offer owners of such a phone. This is exactly the approach that Nokia is taking with the N800. Google may stand to benefit even more than Nokia, however.
Google’s core competencies center around information indexing and advertisement delivery. Nokia obviously is not even close in this regard. If Google created a phone that was optimized for their competencies, it would only serve to dramatically increase their advertising reach in the mobile market. Many in the start-up crowd are already taking about the yet to arrive mobile web as Web 3.0. And while I hate this moniker, I think there is far more potential for mobile applications that is being realized today.
But, what about all the open source developers that would be competing with Google on their own phone? Certainly, Google would want their search and mapping applications to be in an obvious, fixed location on the phone UI, but I think the rest of the platform being open would only benefit them. The open source community would add value to the GPhone by offering all of the “long tail” applications that appeal to a large number of consumers. The phone would actually become a platform for services versus a container exclusively for the applciations that Google develops or supports. Such a platform would allow users to address their specific needs which might result in the GPhone attracting a significant customer audience. And, assuming Google continues to offer robust information products, the GPhone would effectively allow Google to break out of the locked down cell phone market they are confined to today. Of course, this is not a simplistic business model and is not without risks. Only time will tell whether Google want to change the wireless game or continue supporting the providers’ application monopolies.