Google Phone to Compete Against Android?

Google Inc. is kind of like kudzu, when you think about it. It might be poised to take over every inch of the landscape, but it’s doing it organically and in places you never thought you’d see it.

The latest rumor of Google’s plans for world domination comes in the form of the Google Phone, a natural extension of Google’s ongoing foray into the mobile space. It will supposedly be a self-branded device based on Google Android mobile OS platform, which will be designed, built and sold directly by the Internet giant, beginning in early 2010. In other words, the idea is that Google, despite protestations that it would never do such a thing, might be getting into the hardware business, a la Apple Inc..

The rumor, as reported this week by TechCrunch, if true, also means Google will be directly competing against Android-based handsets from others, like the Motorola DROID from Verizon Wireless or the HTC-made Android handsets available from T-Mobile USA. Call it a fratricidal war in the making.

Various reports have Google sourcing components from HTC, Samsung or LG. HTC of course has Android experience; but Samsung contributes several components to the iPhone, an attractive quality. But that fact also means that fellow Korean juggernaut LG might see a Google Phone as an opportunity to hit a similar device home run.

TechCrunch also speculates/refers to unnamed sources for the idea that the phone might be a data-only and VoIP/Google Voice device, with AT&T Inc. lined up as the network provider. The blog points out correctly that this type of Internet-based, IP-only vision was at the heart of Google’s crusade for an open-access block of wireless spectrum in the 700MHz spectrum auction in 2007 – an auction it almost bid in, and didn’t.

The creation of an integrated device – where the OS and the hardware are designed by the same company – answers some Android critics, like Palm CEO Jon Rubinstein, who said that OEMs embracing the platform are doing nothing more than “relying on the kindness of others” for the intelligence in the handset – a big mistake when it comes to controlling quality and brand identity, the argument goes. It’s an arrangement, some have said, that leads to a legion of weak, confused competitors rather than strong devices that can hold their own in the market.

Even so, for Google to leap into the hardware biz at this stage of the game seems odd timing, considering that the DROID (the first handset based on the noticeably improved Android 2.0 OS upgrade) has been a big sales success so far and one of the first Android phones to make good on the promise of powering a true iPhone challenger. Broadpoint AmTech analyst Mark McKechnie said in a note that Verizon Wireless is on track to sell 600,000 of the smartphones by the end of the year, and probably has already sold 200,000 since its initial launch, about half of the standing inventory available.

Why would Google want to further dilute the smartphone pool, potentially weakening the ability of an existing Android device to take a market share lead at such a precarious moment? McKechnie points out that for all the DROID’s success, for comparison’s sake it’s worth noting that Apple sold 1 million units of the iPhone 3G S within three days of its launch, with 37.3 million iPhones expected to be sold worldwide in 2010.

Only time will tell if the Google Phone is real, but the ramifications if the rumor is true are bound to be fascinating.