Vecosys has confirmed TechCrunch’s rumour that Google will partner with O2 to launch a UK phone network. The partnership with O2 is not unlike Virgin Mobile’s with T-Mobile. Known as Virtual Mobile Network Operators, Virgin Mobile piggy backs on T-Mobile’s network infrastructure which means they don’t have to make that massive outlay. I found myself posting quite a long comment over on Vecosys, so I thought I may as well rehash and develop it to post it here.
According to Sam Sethi, Google will use branded Nokia phones as their handsets, and will obviously preload them with Google software. Google already has a lot of mobile apps; you can download Google Maps and a Gmail app to your phone, and many services such as iGoogle and Google Reader are available online in mobile versions, as well as obviously search.
So why are Google doing this? Sam sees the move as an attempt to enable Google to collect our attention data on the move as well as at our computers, as they are already doing.
Whilst he’s probably right indirectly, I’m not sure that’s the main reason behind the decision. At the moment the penetration of mobile internet isn’t that great in the UK, partly due do expensive data bills and partly down to culture - most people just don’t see the need to regularly access the internet on their phone (the most widespread use is probably getting football scores), and are unlikely to be aware that they can access email on a normal phone, without requiring a Blackberry. Presumably the Google Mobile network will be about changing that by making data as cheap as possible, subsidised by adverts on Google services. If the apps are already on the phone, and aren’t expensive to use, people are likely to use them.
It strikes me as a slightly silly thing to do; data costs are coming down (T-mobile and 3 are both offering fairly cheap ‘unlimited’ data plans now). Also, by launching this, they’re tying themselves into a market which is a long way from their traditional core of information organisation and advertising. Virgin Mobile, for example, runs a customer service operation to support its network. Whilst it may be possible to avoid some of that by whitelabelling some of O2’s operations, there will still inevitably need to be some ‘drag’, like sales operations.
It seems like a desperate attempt to increase adoption of their mobile services, which might well help in the short term but will probably hurt them in the long run as they realise that they don’t want, or need, to be part of the mobile business. Had Google itself been invented in the earlier stages of the internet, they might have been tempted to launch an ISP to increase adoption of the internet and indirectly their search engine. I think it is clear that that would not have been a sensible move.
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Actually, Forrester’s latest research has mobile internet penetration at 38% of the market, growing each quarter. This is significant, considering - statistically - overall UK mobile phone takeup is running greater than 100%, meaning people (lots of people) have multiple phones.
The other factor at play here is the reason voice minutes are so cheap for operators liks 3 is they can afford to dump them because of excess (read: unusued) 3G capacity. It is a dangerous game; if punters start using 3G services, it will directly impact the number of voice minutes available. 3G services vs. cheap voice minutes: they can’t have both.
Google’s play here could be prescient if it sees the mobile handset as simply another OS on which it can deliver its services.
But my point is that checking the football scores on the network’s homepage isn’t enough for Google; they want us to be using GCalendar to run our lives, GMail to communicate, GReader to get news, all on our phone. People aren’t at the moment because the apps aren’t preloaded, and it costs too much.
[…] Carriers as mobile internet application platforms. I’ve written about some of this before. I’m a big believer in the potential for carriers to move in a platform direction, rather than remaining so focused on controlling the handset UE and the associated revenue streams. There are compelling services carriers can offer to the next generation of mobile web applications (and we’re not just talking about better J2ME APIs and HTTP headers), if they would just get off the pot and start doing some of this stuff. Parlay/X, SDP, IMS and the rest have got them churning on their own weight rather than focusing on the principles of real platform ecosystems. There are platform services that developers will pay to access, and we could figure out exactly how much if someone would do some experimentation and give it a shot in an incremental way. Full openness may not be the right strategy, but without market testing some initial examples the carriers have no choice but to keep doing what they’re doing. “More of the same” is never a good move for a pressured segment. I’ve always thought that the MVNO space is where we might see more of this type of thing, and who knows, maybe this is what Google has in mind. […]
I suppose you’re looking for a deeper answer than “Because they can”? But, sounds like it’s a moot point anyway, as Google has rubbished the rumours.