Google's Open Source Targets Windows Mobile and RIMM, Not Apple

Includes: AAPL, BBRY, GOOG
by: Yankee Group

By Carl Howe

The initial reports about the Google (NASDAQ:GOOG) announcement of its mobile phone strategy are coming in now. You can look at Google's blog for its official viewpoint. My summary is that Google announced:

  • An open-source mobile phone software stack. Google's not making any devices; it's just creating a standard set of open source software to run mobile phones and use Google services.

  • An alliance of 30 technology and carrier companies. Google got handset makers HTC (HTC), Motorola (MOT), and Samsung on board, as well as notable carriers T-Mobile and Sprint (NYSE:S) to sign up for its Open Handset Alliance

  • A software developer kit. Google will make the SDK available in about a week on November 12.

  • No hardware. Despite the many mockups and prototype pictures running around, no hardware was announced and none is expected until the second half of 2008.

So far, this announcement lines up pretty well with what I had predicted last week, although we still don't know if these OHA partners will help Google in its bid for the 700 MHz spectrum. But in the meantime, we can ask the question, what does this mean for competing software companies and handset providers? Here are a couple of my top of mind thoughts:

  • The OHA targets Research in Motion (RIMM), Symbian, Palm (PALM), and Microsoft (NASDAQ:MSFT). Google has just set the going price of a next generation mobile phone software stack to zero, which compared to the $3 to $8 handset makers normally pay per unit. If you're a handset maker like Motorola or Samsung, that promises to have you anywhere from $15 to $100 million a year if you can make it work. On the other hand, if you're RIM, Palm, or Microsoft, you now have a tough marketing job ahead to convince your licensees that you're that much better than free.

  • There's no iPhone killer here. Despite some who hoped that the gPhone was an iPhone-killer last week, there's no competition for Apple (NASDAQ:AAPL) in this announcement before late next year. You can expect Apple to be selling two or three versions of its iPhone by then and to have about 10 million iPhones in the market around the world. And while the OHA handsets may take the world by storm, more likely they'll simply produce a lot more application software that runs on top of Linux -- which Apple can easily adapt to run on Mac OS X on the iPhone should they become popular.
I will note one thing though: Google is going to have its SDK in the market about three months before Apple will. And that's got to have a lot of mobile application developers drooling. The big question remains though: once you've written your application, what are you going to test it on?

Disclosure: Author is long Apple.