My Early Take On The Google Phone and Google Stock: “Dream” Might Be A Little Strong
So all the buzz in the market is the new Dream phone running the new Android OS from Google.
To properly look at the Dream phone, it must be done in two distinct parts: The Google Android Operating System, and the actual telephone hardware.
By every demonstration I have seen and the reviews that I have read, the indications are clear that the Android software is smartly-built, innovative technology, and the Google applications on board are awesome. Other words I have heard to describe it: stable, fast, easy to use, clean, fun.
All that is great but at every step and in every way, this phone was pitched and launched as a competitor to the iPhone. So is this an answer to the iPhone? At this point, no. In fact, it isn’t even strong enough to be a serious competitor.
The devil is in the details: music from Amazon…? No Outlook or other enterprise email access (I read that Motorola has GoodMail programmers working on apps for this phone. How about putting the GoodMail programmers to work on making GoodMail for Android, and take advantage of Apple’s iPhone mis-step that I wrote about previously). And, not only there is no enterprise email, but you must have a GMail account to get any email at all to the device? This is as heavy-handed than anything Microsoft has ever done. To the Company whose motto is “Don’t Be Evil,” I would say “you first.”
No enterprise email capability is probably the best evidence that it was rushed out the door… I mean, they can’t be serious about pushing a Google Apps -only strategy on enterprise email users and think that this will fly at all, let alone be a viable long term solution. If they would have launched the phone a year ago, they could have gotten away with this, but now, with Apple and every other smartphone supporting Exchange email, it is a gaping hole as conspicuous in it’s absence as a missing nose.
As for the phone hardware itself, I am even more leary. The hardware is manufactured by Taiwanese outfit High Tech Computing, also known as HTC. In the old Fake Steve Jobs blog, Fake Steve says that HTC stands for Heavy Taiwanese Crap. Funny, and from my personal experience, true.
Two years ago I owned the HTC Cingular 8525. It was Windows Mobile, so I will grant you that some of the issues could be OS. The phone sucked battery, was slow, hesitated constantly, locked up frequently which required pulling the battery and waiting five minutes for a reboot (try that seven times a day, right in the middle of phone calls no less). In short, it was a total piece, and I found myself back to unsexy predictability of a Blackberry (actually, there is something sexy about an electronic device that works exactly as advertised).
Fast forward to March of this year: my wife bought a very similar Windows-based HTC, this time from TMobile. And all the same issues were still prevalent on that phone. After less than 3 months she literally threw it away and bought a Blackberry.
Even if the stability issue was the Windows OS, the new Dream phone still has all the annoying “features” of older HTC hardware. For example, the phone does not accommodate a standard 1/8″ head phone jack. Want to listen to some of that great Amazon music? Don’t forget your 3/32″ to 1/8″ adapter. This is the second best evidence that the product was rushed.
Finally, have you seen this thing? It is longer and thicker than the iPhone. And as ugly as a mud fence. This design would have been cutting edge in 2003. But compared to the iPhone? The upcoming Blackberry Storm? Talk about the ugly sister. When you add to this stingy memory, TMobile’s not-quite ready for prime time 3G network, and a price point very similar to an iPhone, an iPhone killer it is not.
Conclusion about the Dream Phone:
The Dream phone is large and clunky and the design is awful, and the product looks and feels rushed. What’s worse, they are revealing it to an audience that mostly has already found a home in the iPhone, and the sole advantage of a keyboard will not bring them over to this phone. Google is trying to poach the iPhone set with bulky, ugly, substandard equipment, an unknown, unproven OS, and second-tier providers.
As for winning over other smartphone users, remember: There is substantial overlap between mobile users whose needs demand a keyboard and users who require enterprise email access. Those who have shunned the iPhone for this reason will simply await the new Blackberry models (which are reliable and sexy).
In spite of these early issues, you really have to hand it to Google.
Google gives away this OS for free, so long as they can serve ads through it. Google understands that there are more people in this country that are between 18 and 35 than there are over 65. And this demographic wants to interact with the internet in real time, always on, at their whim and leisure. And they don’t want to carry a 13- or even 3- pound device around to do it. Google sees the potential and knows that serving this audience in the way this audience desires is the next great frontier for advertising.
Google has built a nice OS, and the ideas around applications that take advantage of sensors and crowdsourcing are really innovative and will catch on. Google will learn and innovate more and find a significant role for themselves in the mobile space. The Android OS is designed to assure that Google will succeed as the medium for advertising moves from internet to mobile.
Finally a thought you absolutely have not heard anywhere else: Though Google is pushing this as an OS for smartphones, the new Google internet smart search auto-complete functionality will certainly benefit users on a standard 12-button phone trying to do searches. 90+ percent of the phone market consists of those 12-button phones. And Google was recently selected as the default search provider for Verizon mobile phones.
So what about Google stock? Paid Ads and Paid Search are going down with retail sales, and for the next several months there will be little joy to report out of Google. Add to that the recent announcement to hold off their Yahoo ad partnership pending a look by the DOJ. Google recently achieved 63% of internet search– and this is primed to fall as well (how much higher can it really go? And sad to say, but even staying the same will be seen as a disappointment).
All that bad news will not be made brighter by the Google Phone version 1. With the obvious flaws, economic headwinds, and the strong competition (now even HP is getting in the smartphone game with an updated iPaq), there will be no joy from the initial sales results (my fearless prediction: less than 300,000 sold in the first 75 days, compared to 1 million iPhones over the same span). Put all this together and you get a much lower stock price. But longer term, this OS will be something special, the ad business will return, and Google is ever formidable in that they have the brains and the cash to compete in any space they choose. I would be a hard looker at anywhere under $350, and a certain but patient buyer under $300.
The Extra Rich Disclaimer: As of this writing, I am long QCOM stock and QCOM stock options. I am a QCOM employee, though I am not employed within any of the divisions that build or license phone chips, 3G technology assets, or the BREW application. The views expressed herein are mine solely and the content herein is derived entirely from publicly available news sources.
