Google Announces Wireless Service Intended To Promote Industry Innovation
Google Wireless: the rumor was true. At the Mobile World Congress conference yesterday in Barcelona, Google announced that it was in fact going to launch its own (MVNO) wireless phone service. In some ways it’s more analogous to Google’s Nexus handsets than to Google Fiber, an analogy many financial analysts have used. Google played down any sort of direct, competitive assault on […]
In some ways it’s more analogous to Google’s Nexus handsets than to Google Fiber, an analogy many financial analysts have used. Google played down any sort of direct, competitive assault on traditional wireless carriers. Google SVP Sundar Pichai said the service would launch in the coming months and operate at “small scale.”
According to the Wall Street Journal, Pichai told the conference that the company’s goal “is to drive a set of innovations which we think the system should adopt.” Think of it as a kind of “reference design” for wireless plans of the future — the Google Nexus of wireless programs.
Most traditional news outlets, however, focused on the competitive aspects of the announcement, saying it was sure to “exacerbate the tensions between Google and the carriers” or played up the “frienemies” angle. According to the WSJ’s coverage Google will build the network from a mix of Sprint and T-Mobile network bandwidth and WiFi.
Years ago Google filed a patent describing a system that would be able to connect and seamlessly move internet devices between the strongest sources of connectivity or bandwidth to deliver a better user experience. This may now represent the fulfillment of that vision.
Exactly what markets will be served and who will get access are uncertain at this point. Also how Google will sell the service is somewhat unclear. Expect that it will be mostly online, as with Google Nexus devices. However the company could also use its Best Buy “store-within-a-store” presence to promote the new service.
It remains to be seen whether Google offers any aggressive phone + service bundled pricing. Google will want people to adopt and use the system but subsidized or low-margin pricing is sure to be a sensitive issue and could be a source of tension with carriers.
In roughly 2006, Google Executive Chairman Eric Schmidt discussed the possibility of ad-supported, free wireless service. Versions of that idea have been tried unsuccessfully a couple of times in the past. I wouldn’t expect Google to go that route.
Most MVNOs in the past have failed because they weren’t able to build brands, awareness and trust. Google has an extremely strong brand and, depending on service quality and pricing, may see demand beyond the limited boundaries of the offering. There’s much more demand for Google Fiber, for example, than supply.
One financial analyst also thought that Google Wireless would pave the way for Amazon to do something similar but perhaps more directly competitive with the carriers.
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