By AMOL SHARMA and KEVIN J. DELANEY
The Wall Street Journal
Google Inc. is searching for growth in cellphones.
The company, which has made billions in Web advertising on computers, is courting wireless operators to carry handsets customized to Google products, including its search engine, e-mail and a new mobile Web browser, people familiar with the plans say. Google wants to capture a big chunk of the fast-growing market for ads on cellphones.
Google has invested hundreds of millions in the cellphone project, say people who have been briefed on it. It has developed prototype handsets, made overtures to operators such as T-Mobile USA and Verizon Wireless, and talked over technical specifications with phone manufacturers. It hopes that multiple manufacturers will make devices based on its specs and multiple carriers will offer them.
For wireless operators, the plans are a double-edged sword. Google’s brand and its popular Web services could help operators sign up more subscribers to data packages, on which they increasingly rely as voice revenue declines. But operators have been wary about losing control over the mobile-ad market.
The long-rumored Google phones are still in the planning stages and wouldn’t be available to consumers until next year at the earliest, say people familiar with the idea. Some details are likely to shift as the plans develop.
The Mountain View, Calif., company has made clear that it is serious about developing advanced software and services for cellphones. "What’s interesting about the ads in the mobile phone is that they are twice as profitable or more than the nonmobile phone ads because they’re more personal," said Google Chief Executive Eric Schmidt at the D: All Things Digital conference in May.
A Google spokesman declined to comment Wednesday on a Google phone project but said, "We are partnering with almost all of the carriers and manufacturers to get Google search and other Google applications onto their devices and networks."
The Google phone project goes far beyond Google’s existing deals to include its search engine or applications such as Maps on select handsets, say the people familiar with the matter.
The company’s past efforts to get its software on cellphones have raised some concerns in the industry. Verizon Wireless Chief Executive Lowell McAdam said the carrier has not tightly integrated Google’s Web search engine into its phones because of Google’s demands to get a large share of search-based ad revenue.
"What this really boils down to is a battle for the mobile ad dollar," McAdam said recently. "They want a disproportionate share of the revenue." McAdam declined to comment specifically on any Google phones.
Google has said it may bid for wireless-spectrum licenses at a coming government auction. On Tuesday, the Federal Communications Commission approved rules addressing some of Google’s concerns about the sale.
If it owned spectrum, Google might turn into a phone operator itself. However, such a project would take years to come to fruition and cost billions. For now, Google has to work with existing cellphone operators to get its mobile products to consumers.
Cassell Bryan-Low, Jane Spencer and Evan Ramstad contributed to this report.