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The impact of Google’s new phone

Marketplace Staff Jan 5, 2010

The impact of Google’s new phone

Marketplace Staff Jan 5, 2010


Kai Ryssdal: With apologies to Dr. Freud, sometimes a cellphone is just a cellphone. And sometimes a cell phone is oh so much more. That was the case in Mountain View, Calif., today where Google made its long-awaited entry into the mobile market. Miguel Helft covers technology for the New York Times. He also covered the Google announcement today. It’s good to have you with us.

MIGUEL HELFT: Thanks for having me.

Ryssdal: So first of all, we’ve caught you up at Google headquarters I understand. What’s going on up there today, a big phone announcement, right?

HELFT: Yeah, Google just unveiled a new phone. This is a very slick device. It’s a little bit thinner than the iPhone. It looks very fast, and it has some really cool capabilities like the ability to input text by speaking into it. So if you’re writing an e-mail you don’t have to use the onscreen keyboard. You can just talk into it.

Ryssdal: For all of that, though, the news out of Google today really isn’t about this phone, right, it’s about what it represents in mobile advertising and Web going on people’s phones everywhere, yes?

HELFT: Right, we have to remember that Google makes its money by selling ads, not by selling phones. And that hasn’t changed. But today the company announced a new store, an online store, and this phone is only available on the online store. But I don’t believe that’s the goal of Google, to make money by selling hardware, like, for instance, Apple. I think they really want to get as many Android phones into as many hands as possible, and they see this as a way to accelerate that process because the more of these phones are out there, the more people click on ads, and the more money Google makes.

Ryssdal: Let me ask you this, though, if I have a smartphone, and I have an app for, I don’t know, Amazon, I’m just going to go straight to that app and then go to Amazon. I’m not going to go to Google and then type in Amazon.com and do a Google search, right? So there is a downside here, no?

HELFT: There’s certainly a downside, but the smartphones are coming, and they’re going to increasingly replace PCs as a primary way to access the Web. And so whether you like it or not, people will have little applets that they click on and go to Amazon or eBay and bypass Google. I think the gamble Google makes is that overall increased usage of the Web, whether it’s on a PC or mobile phone, will benefit it. And there will be new ways to advertise on these devices, there will be ways to offer you a coupon when you search for a camera and say, hey, there’s a store two blocks away that sells it for $2.99.

Ryssdal: How big is the ad market on mobile? I mean, how much upside potential here does Google have?

HELFT: The projections for growth of the mobile ad market are all over the place. And like a lot of these things they tend to be hyperbolic at the beginning. Today mobile phone advertising, it’s about 5 percent of all the money that is being made in the mobile Internet economy. It is 40 percent on the PC. It’s not clear how much upside there is on the mobile phone side, but it’s probably significant.

Ryssdal: Nobody at Google will probably answer this question should you pose it to them, but how much danger are they in really of sort of losing their position as the Web moves from PC-based on your desktop to these things that you carry around in your hands?

HELFT: Whenever there’s a shift in computing whoever is the leader should be worried about maintaining their position. Google has moved very aggressively to do that. It’s acquired a whole bunch of mobile phone technology start-ups. It’s really pushed the carriers, and the handset makers to make the mobile Web, which used to be controlled very much by the carriers, to look more like the PC Web, where any application, you’ve got a device and you can install any application you want. And that’s good for Google. So should they be worried about this transition? Sure, but if they play it well it could be a great opportunity for them.

Ryssdal: Miguel Helft. He covers technology for the New York Times. Miguel, thanks a lot.

HELFT: Thank you.

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