Peter Kafka

Recent Posts by Peter Kafka

What’s Google Doing With Its Own Phone? Playing Catch-Up With Apple, of Course.

Google is going to sell its own phone, something it has never done before. And it’s going to ask customers to buy the phone without the help of a mobile carrier, something that Americans, at least, almost never do.

What are Eric Schmidt and company thinking? This might help explain things (click on image to enlarge):

smartphone ad market

The chart, by the way, comes from mobile ad company AdMob, which Google is buying for $750 million, assuming the Feds don’t stop the deal. And both the purchase and Google’s (GOOG) phone plans are aimed at the same thing: Playing catch-up in the market for smartphone ads.

That market barely exists now and it may take some time to really take off. But the fact that Apple’s (AAPL) iPhone already owns half of it (at least in the U.S.) has to be terrifying to Google.

Google’s 20 percent share, by the way, isn’t truly awful. Six months ago, that number was seven percent. And the share will presumably keep increasing as devices running Google’s Android mobile operating system, like Motorola’s (MOT) Droid, get more exposure.

But none of the Android devices that carriers and their manufacturing partners have produced so far have really wowed anyone yet. Google’s thinking, apparently, is that it can pull off that feat by creating a phone on its own (working with Taiwan’s HTC).

But even if Google’s device, which is supposedly going to be called the Nexus One (really?), does strike a chord with consumers, I don’t think Google is going to end up fully committed to the hardware business.

My bet is that the company hopes the Nexus One serves as a working template/kick in the pants for carriers and other manufacturers that want to come up with Android phones consumers clamor for–and help Google catch up to Apple.

Nexus One

[Photo: Purported Nexus One via Cory O’Brien]

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— David Pogue on why he’s joining Yahoo