The search firm's effort to tackle the device market through a Linux alliance model goes way beyond devices. It touches on smartphones, business models, mobile data, industry partnering and the future of mobile itself. It's that big.
Perhaps more than anything it underlines the fragility of mobile industry business models today.
This particular story began with the unveiling of the Google-led Open Handset Alliance (OHA) on November 5, followed by the release of the first Android toolkit a week later. Google and its partners, including Motorola, Samsung, T-Mobile, HTC, NTT DoCoMo and China Mobile, are pitching open source as a path to faster innovation at a lower cost.
'This partnership will help unleash the potential of mobile technology for billions of users around the world,' trumpeted Google Chairman and CEO Eric Schmidt.
Critics were quick to point out that it wasn't the first Linux tilt at the mobile operating platform.
'There's always been this promise that Linux open source is going to bring this incredible opportunity for developers,' Chris Sorensen, Asia-Pac lead product manager for Microsoft's mobile business, told Telecom Asia. 'The promise of Linux on phones has not been delivered on, and if you look at some of the numbers, their percentage and penetration into the market is still quite low. '
Ovum director of wireless intelligence, Martin Garner, notes that if the announcement 'didn't have Google's name on it, then we would have low expectations. The fact that it does have Google's name, then we have expectations. But they will have to show why their consortium effort could be so successful. '
The consortium approach carries its own risks, he points out. While some mobile alliances have been successful - GSM for example - the industry is littered with the corpses of failed alliances. It is not easy to get agreement in a group that is both large and diverse enough to have a market impact.
The biggest problem is that the many attempts at mobile Linux have made it fragmented. Motorola and Samsung, for example, are both members of multiple Linux groups, and for each they have promised to release a Linux handset in 2008. 'They are obviously going to have to break some hearts,' notes blogger Sender11.
The OHA is in fact the second Linux alliance to launch this year. The LiMo Foundation was announced in January 2007 with the backing of several firms that are now part of the Google effort (like NTT DoCoMo, and of course Motorola and Samsung). It now has 21 members signed up, many of them in Japan, including NEC and Panasonic.
LiMo Foundation issued a statement welcoming the formation of the Google alliance. It said the OHA shared its core beliefs and that there were 'no philosophical or technological obstacles preventing' the two parties working together.
But the groups remain separate, as are other mobile Linux bodies, like OMTP (Open Mobile Terminal Platform), LiPS Forum, Gnome Mobile and many other groupings led by individual vendors.
Yet, it's hard to see Linux as a complete failure.
Motorola, the world's third-largest handset vendor, uses Windows Mobile as well as Linux as part of its multi-platform strategy, an approach driven by a desire to move away from Nokia-dominated Symbian. Motorola released its new Linux MotoMagx platform just four months ago and aims to base 60% of its handset portfolio on it.
It's not the only big player doing multiple platforms. Nokia's Wi-Fi enabled internet tablets all run on Linux. But when it comes to mobile phones, the Finnish giant is all about its 47%-owned subsidiary Symbian, and is increasingly pushing it onto handsets down range.
ABI Research has forecast that Symbian will hold 70% of the mobile OS market in the next several years, followed by Linux and then Microsoft. By the end of last year, Symbian had shipped 110 million units. It sold another 35 million in the first half of 2007, so total shipped devices now probably number around 170 million.
That's just a sliver of the 2.6 billion GSM/W-CDMA handsets being used worldwide. But of course, this is not just any handset segment. Right now it's the fastest-growing and most profitable part of the market. Indeed, the fate of the smartphones will determine the future course of much of the handset market as well as drive the direction of the mobile industry.
'It's very different from the single function device. It's the fastest-growing trend in our business,' said Dan Wong, vice president multimedia, Nokia Greater China.
Nokia's latest result tells the story. In the third quarter the mobile phone leader posted growth of just 3% in its standard handset business but 23% growth in its multimedia group, which sells its consumer smartphones, and 100% in the enterprise division, which makes smartphones for business users.
And then there's the dramatic example of the iPhone. Bengt Nordstré¥¢, a mobile industry veteran and now a vice-president at VeriSign, says the fact that a newcomer like Apple 'can do software and interface far better' than any existing firm shows what is possible.
'I am the first one to recognize it is not easy to be in the mobile handset operating system. There are reasons why it has not been successful, and reasons why Symbian is struggling for prime time to get their systems to phones other than Sony Ericsson,' he said.
More than that, he believes Google will help drive sorely-needed innovation into the mobile business.
'Apart from mobile broadband and emerging markets, we don't have any growth [in mobile],' he said. By contrast the internet, based on open standards and an open infrastructure, throws out a new smash hit almost every year. In the last few years, MySpace, YouTube and Facebook, to name three, have attracted millions of users and changed consumer behavior. No recent mobile app has had anything like the same impact.
'Internet traffic is growing 100% a year. When I look and try to analyze the mobile industry, it's striking to me how much in need we are of a more internet business model,' Nordstré¥¢ said.
In particular, he thinks Google, which takes nearly all of its revenue from ad sales, can bring the advertising-based business model into cellular. Advertising-supported mobile services are much discussed, but no one has built a business out of it. Nordstrom notes that entire industries, including newspaper, magazines, TV and the internet itself, are based on advertising, and it's a natural fit for mobile. 'Advertising kills subscription every time,' he says.
However, Ovum's Garner says that with the advent of HSDPA and flat-rate pricing bundles, mobile demand is picking up strongly. 'I don't think it's essentially the handset platform that is needed to drive demand,' he says.
In any case, the pieces of the mobile net are now failing into place, he believes, in particular the growing adoption of flat-rate pricing, which gives consumers confidence that their spending is capped.
At the same time, Garner says parts of Nokia's S60 platform is already opening up to open source, and the company has announced its support for standards-based widgets.
Nokia's Wong says the handset-maker sees Google's entry as a confirmation of its own strategy, which is toward software and services instead of terminals. In fact from January 1 next year software and services will make up two of the company's three divisions.
'We really view [Android] as confirmation of the way we view the market. We expect that more and more players will come in as well,' he says.
Nokia's strategy is illustrated by its acquisition spree this year, where it has bought games, navigation, web 2.0 and other startups, culminating in the $8.1 billion takeover of mapping firm Navteq.
When it comes to handset platforms, Wong says Nokia's Series 60 on Symbian is the 'natural first choice' for developers because of its huge footprint. It is also being expanded to support user-generated apps and content with its MOSH initiative, a community site which enables users to share content and applications.
Perhaps that will be the key to handset market - the ability to reach out and attract users as well as developers. Both Nokia and Microsoft today can say that their apps will run across hundreds of handsets without further development.
For Google and the OHA, with an installed base of zero, it will be a race to get that kind of scale.
Tike all Google initiatives, Android's launch generated a huge amount of ink, a lot of it skeptical. But the early reactions to the toolkit release were more positive.
Consultancy VisionMobile says it's the first software stack to use an open source license, meaning OEMs, operators, distributors, can add proprietary functionality to their products 'without needing to contribute anything back to the platform'.
Handset firms and developers can add or remove functionality easier, 'without being restricted by component-specific licenses, as is the case with Symbian OS and the Windows CE stack for example,' it says.
This will allow white-label phones 'to be created by design, not afterthought' and will put the power of innovation in the hands of users as well as producers.
'With devices built on the Android Platform, users will be able to fully tailor the phone to their interests,' OHA says. 'They can swap out the phone's homescreen, the style of the dialer, or any of the applications.'
A number of bloggers note that OHA isn't going down the RIA (Rich Internet Application) path. In fact, most of its application development is done by Java, notes developer John Lombardo.
He quotes approvingly from the launch announcement that all Android applications are equal - it does not differentiate between those that that come with the phone and those that are added by third-parties.
Lombardo says the SDK and API are well-designed, but calls on Google to release the source code.
Blogger Sender11 applauds the fact that user experience experts, and not just 'uber-geeks and hip turtleneck middle management' are involved in the OHA. 'I am looking forward to see what those guys can come up with!' he writes.