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Mario Queiroz, vice-president of Product Management for Google, displays Google's Nexus One smart phone during the unveiling at Google's headquarters on Jan. 5. (Pool/Getty Images)
Mario Queiroz, vice-president of Product Management for Google, displays Google's Nexus One smart phone during the unveiling at Google's headquarters on Jan. 5. (Pool/Getty Images)

Google upsets carriers, analyst says Add to ...

The launch by Google Inc. of its Nexus One smart phone is upsetting wireless carriers, an analyst says.

Carriers are "not at all pleased" at the Internet search giant's decision to launch its new handset with the pre-loaded, Google-designed Android operating system, Toronto-based Peter Misek of Canaccord Adams said in a research report.

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Some handset makers, such as Research in Motion Ltd. and Apple Inc. , have designed operating systems to go with their flagship devices.

But other handset makers, such as Motorola, already use Google's open source Android on several different models, though none as advanced as the one Google put on its new Nexus One. These companies also may not be pleased with Google's entry into the phone market: By running Android on their phones, handset makers are essentially tossing cash to a competitor.

"Simply put, Google is now competing with the very people who license and support Android," Mr. Misek said.

The launch of Google's highly-anticipated smart phone, at a press conference in Mountain View, Calif. Tuesday, accompanied the announcement of a new online store, where consumers in the United States, Britain, Hong Kong and Singapore can purchase the phone. At launch, the phone is not being shipped to Canada, though the SIM card-using Nexus One would work here.

Although Google has partnered with T-Mobile USA and other U.S. carriers, its efforts to sell directly to consumers online is threatening to disrupt the way carriers previously sold phones to customers - that is, through their own retail stores, at a highly subsidized rate, in return for long contracts.

"For carriers, Google seems to be trying to circumvent their ownership of networks, spectrum, and the very customers they bill each month. At stake is the ownership of the mobile internet and customers who will increasingly use it," Mr. Misek said. "Handset makers, on the other hand, feel they may empower a very potent competitor by continuing to use Android."

There appears to be a "bifurcation" of the Android operating system, with Google putting the most advanced version on its own branded phone, said Kevin Restivo, a senior mobility analyst with IDC Canada.

"There's different levels of Android that seem to be emerging," Mr. Restivo said.

Tuesday, Google executives defended the strategy and said its partnership with carriers did not mean an end to the existing wireless system.

"Nobody's saying they should abandon their current mechanism," Andy Rubin, Google's VP of engineering, told reporters. "It's just another way for them to reach consumers."

 
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