Will Google Phone Be Good for Carriers?

The T-Mobile G1 from HTC, the first device powered by the Google (GOOG) Android platform, comes pre-loaded with bandwidth heavy applications such as YouTube and Google Street View. While these are clearly designed to benefit Google Inc., they might not be good for carriers. That is because of the spectrum and bandwidth limitations of mobile infrastructure, which may not make these applications profitable unless subscribers or advertising buyers are willing to pay for them, said Ping Zhao at CreditSights.

The device will be available on October 22 in the U.S., in early November in the U.K., and in the first quarter of 2009 across Europe. RBC Capital Markets said Sprint may also have an offering by the end of the year.

Mr. Zhao expects T-Mobile will sell significantly fewer G1 phones than AT&T (T) does iPhones. He also does not expect it will have a material impact on carrier market share in the U.S., but it should make HTC a bigger player in the wireless handset market. Apple (AAPL) shipped more than 1 million iPhones in the first full quarter, while he suggests G1 shipments could be in the range of 100,000 to 300,000.

RBC analyst Mike Abramsky estimates that the G1 could ship 300,000 to 500,000 units in calendar 2008 and 4 million to 6 million in 2009. Meanwhile, Apple Inc. is expected to sell 6.5 million iPhones in the fourth quarter of 2008 and Research In Motion Ltd. (RIMM) 7.5 million devices.

He does not expect the G1 to materially cannibalize momentum for the Apple iPhone or RIM (pending Storm) , but said it should pressure all smartphone vendors into a war over wooing third party developers and content partners to their respective platforms.

Mr. Abramsky noted that while the initial reviews for the G1 are good given its personalizeable interface, applications, touchscreen and keyboard, there are design and feature gaps when compared to Apple’s iPhone and Research In Motion BlackBerrys.

Mr. Abramsky told clients:

If it can gain developer and user momentum, Android has the long-term opportunity to take market share, in our view.

He estimated that Google could capture 2% to 3% of the total addressable market by 2011.

The software platform and operating system for mobile devices has the benefit of being able to leverage Google’s more than 100 million online users, as well as its open source development platform and advertising-oriented business model, he added. But challenges remain, such as its hardware features, pricing and advertising model.

RBC expects no financial contribution from mobile for Google in the near term and possibly not until 2011 or 2012.

Comments

[Kontra:]

Its manufacturer HTC called it "The most exciting phone in the history of phones." I compiled a list of all software, hardware and service flaws of G1 and asked the question, "Would Apple have been utterly crucified and AAPL have tanked if the iPhone came out with so many shortcomings?" in:

The Big List: 30 critical issues with Google G1 phone
counternotions.com/200.../

2008 Sep 25 06:14 AM

[Nick Gogerty:]

The carriers offer a walled garden called Voice. this will disappear in 5-10 years and with it the premium they charge. A combination of VOIP, SIP trunking and inteligent Unified communication will end run the garden. The Carriers will then offer a commodity IP dialtone at reasonable rates, there will of course be the expected impact on margins and equity values of those carriers. IP uber alles: Music companies, TV & Cable, phone companies...

2008 Sep 25 09:04 AM

[Apple at 60$:]

Anybody has any updates on the talk between Apple and China Mobile?

2008 Sep 25 03:54 PM

[http://www....:]

the only advantage i see is the keyboard. disadvantage, t-mobile's high speed network is very limited and not available everywhere or in my state.

2008 Oct 03 12:17 PM