Oct 11 2007
What is in a Google phone?
Considering Google’s revenue sources and their track record in selling a product, there’s very little in a Google phone.
Why? Google’s main business is in advertising. Advertising creates value in mass markets. Let’s assume that Google could sell the gPhone as fast as Apple, i.e. 1 million devices in 3 months. After a year, Google would manage gathering some 4 million gPhone users. Given that Google’s very limited success in selling enterprise search devices and limited experience in consummer devices, this number is pretty optimistic.
Comparing with the 1.25 billion Internet users, 4 million is a drop in the bucket. Comparing with the 70 million a year smart phone market, this is only ~5% penetration. And the net margin in a gPhone will not be as high as Google’s current 25~28%. Is there any fundation in Google’s target price of $710~$730 by analysts from Stifel Nicolaus and Stanford Group, or Cramer’s “total and unequivocal lowball estimate” of $750 within a year? If Google stock goes over $700, it would not be so because of gPhone.
Well, I am a fan of Google. I think the true objective of gPhone, if there is one, is to raise the hype/awareness of Google’s mobile software. These mobiel software has been avalable for quite sometime for Windows Mobile, Symbian and Blackberry devices. These software could bring Google some 200~300 million smart phone users and the widely salivated mobile ads revenue.
As Steve Jobs said at 2007 D: All Things Digital conference, “thick” clients together with web services can create amazing applications. Google gPhone may turn out to be a collection of mobile “thick” clients (or mobile software), which is already avaiable at Google Mobile , i.e. Gmail, map, 411, SMS, news and the like. It may not even be a platform or operating system, because Google engineers develop these applications faster than any other 3rd party developer at the current stage.
Related
The idea of Google phone seems as fascinating as cell phone trees. Ever since the introduction of mobile phone arena, the telecommunication has seen a revolution in communication with a host of cellular phone services every now and then. As a result we come across such concerns as cell phone security in our daily lives. Trivial matters of purchasing extra gadgets and perks specially the cell phone accessories such as hands free kit and replaceable cell phone battery is quite a norm as is unlocking cell phones which have been blocked over the network.
GOOG will continue to go up, perhaps not as high as $700.
[Reply]
No, Google will crash and burn, in a not too far future. Facebook rocks.
[Reply]