The Googlephone!

Google is gearing up for an all-out assault on the mobile-phone market that will include a new, Google-branded handset and the first comprehensive Google phone service with unlimited free calls.

For the first time, a single company will control everything from the software in users’ phones to the services they use to make calls and surf the web.

The Googlephone promises to be one of the most advanced smartphones, with a large touchscreen display and a processor almost twice as fast as the one powering Apple’s iPhone 3GS. It will probably be the first phone to run a new version of Google’s Android software, codenamed Flan, offering high-speed 3-D gaming said to be as good as that of many handheld consoles.

According to Ashok Kumar, an analyst at Northeast Securities, a financial services firm, the Google-branded phone will be built by a third-party supplier, possibly the Taiwanese phone maker HTC, and will incorporate a processor from Qualcomm.

The real breakthrough, however, will come with the marriage of the Googlephone to Google Voice, the Californian company’s high-tech phone service. Google Voice gives US users a free phone number and allows unlimited free calls to any phone in the country — landline or mobile. International calls start from a couple of cents (just over a penny) a minute. Google Voice also uses sophisticated voice recognition to turn voicemails into emails, can block telemarketing calls automatically and offers free text messaging.

Google sounded its intentions two weeks ago when it purchased a small company called Gizmo5, which had developed technology to connect Google Voice with voice-over-internet (Voip) networks such as Skype. Now Google has the means to offer a complete, end-to-end phone service, with which consumers can make and receive calls between the Googlephone and other phones or computers anywhere in the world, and often for nothing.

“We’ve never had this situation, where a single vendor controls the entire stack, from the operating system right up to Google’s cloud services,” says Kumar. “It changes the competitive and bargaining dynamics like never before.”

Google declined to comment on its plans, however.

One victim of the Google juggernaut could be Skype, the internet phone service. Skype software uses a broadband internet connection to offer free voice and video calls to other Skype users, plus cheap calls to landlines worldwide. If Google can succeed in linking its Google Voice service to Skype and other Voip networks, it can lure users with the offer of free long-distance calling and a “real” phone number.

One of Google’s challenges will be to link the phone to mobile networks so that the company’s services can be offered not just over wi-fi-connected broadband, but also over a 3G link to the internet, resulting in a real call-from-anywhere device.

This could prove a problem, though: few phone networks will appreciate being frozen out of lucrative business such as voice calling and text messaging, and being reduced to a simple data pipeline for Google’s services.

Google could also antagonise the networks by selling its mobile phone directly to customers and inviting them to use their existing Sim cards, whatever network they are on. “Google wants the Googlephone to be carrier-agnostic,” Kumar predicts. This could push the price of the handset to well over £500, because the cost of smartphones is heavily subsidised by networks, which recoup the money by locking customers into their services.

The mobile networks aren’t the only enemies Google risks creating. Other phone makers now using the Android operating system, such as Samsung, Motorola and Sony Ericsson, might not take kindly to Google keeping the most up-to-date version of its software for itself.

Although the popularity of Android has grown quickly since its launch last year, it is still installed on less than 4% of the smartphones sold, and there are other free operating systems (Symbian, for instance) to which rival phone makers could switch.

Can Google have its Flan and eat it? We may not have too long a wait before finding out, because Kumar and other experts are predicting that the Googlephone will be launched in the US early next year.