Will the gPhone change the mobile industry's business model?

Blogging while attending a conference.

Rumors are that the long-rumored Google phone will be announced soon. A Fortune blog quotes the rumor that the announcement is coming next week (Oct. 24) while the blog of ZDNet's editor repeats the rumor that the announcement is Nov. 5.

So people are writing (if not reading) are rumors about rumors about rumors. The interest in the gPhone today is comparable to that on the iPhone 11 months ago, and exactly parallels the buildup to Apple's Jan. 9 unveiling. It's not clear whether this is because these firms are highly visible, because they're good at using secrecy, because the industry needs another entrant, or because bloggers just need something to write about.

The Fortune article quotes a securities analyst as saying 50,000 phones will ship this year, which seems very optimistic timing. Apple unveiled the iPhone in January (for June 29 availability) because details were going to leak in the FCC certification process. If the gPhone isn't being evaluated by the FCC today, it seems unlikely that it will pass by Dec. 15.

More interesting is the claim that HTC is (a) firm that's going to make gPhones. This seems a lot more plausible, because it knocks down (silly) speculation that Google would make gPhones. Also, HTC is quite plausible as a gPhone maker, since they are a generic Taiwanese ODM (trying to become a branded vendor) with US presence via Cingular (AT&T), and in fact is only known in the US because they have already used someone else's software (Windows Mobile) as a market entry strategy. But of course, if Google is a mobile software supplier, there will be many other vendors.

The main reason I raise this is not to speculate on release dates, features or partners, but because of one of the few new insights that I've seen on this topic over the past 6 months. This morning on Forbes.com, Brian Caulfield argues that the gPhone business model is far more important than its features -- because (like everything else Google does) it will presumably be ad-supported, and leverage Google's core competence in ad targeting.

Since Microsoft and Apple are targeting the high end, and Google (with open source) is targeting the lwo end, Caulfield's speculation is also that the gPhone will have the greatest impact on the developing world. That makes sense since the gPhone in the developed world, would be a substitute/replacement for existing cellphones, while in the developing world (India and China are oft-mentioned) is the only place left with any new adoption possible, not to mention the most cost-sensitive users who might be more willing to put up with ads.

This would be a quite a change for the mobile industry. A lot of people run around saying Asia is the leader of mobile innovation, with Europe second (except possibly for smartphones) and the US last. But "Asia" normally means Japan, as with NTT's i-mode or FOMA (UMTS), or the J-Phone creation of the cameraphone category. More recently it has also included Korea, with nearly universal adoption of 3G (via cdma2000 migration) and experiments in things like music downloads and mobile TV).

India and China were already the world leader in mobile phones as a substitute for wireline -- most countries adopted wireline then wireless but these countries (and others) are on a path to bypass wireline altogether. Could ad-supported mobile phones in India and China be the beginning of a global trend? In this case, it really would be an important step in Google's inexorable march towards Total World Domination.

On the other hand, it might be that Americans and Europeans and Japanese will be quite happy with their existing cellphone and business models and not interested in switching to an ad-based model. In that case, the gPhone would reflect a strategy for part of the world (and the most rapidly growing part) but an inevitable wave for the whole world. In that case, what influence will Google have on the mobile industry in the developed world?