Google To Follow Apple into the Cell Phone Market? - InformationWeek

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8/30/2007
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Google To Follow Apple into the Cell Phone Market?

By Paul Korzeniowski Cell phones seem to be primary currency in todays high tech market. Now that the Apple iPhone buzz is dying down, reports are that Google, is about to become the next industry heavyweight to jump into the market. These vendors seem to think that cell phones are a good way to connect with the young, hip buyers who dictate which products are cool and which are pass

By Paul Korzeniowski Cell phones seem to be primary currency in todays high tech market. Now that the Apple iPhone buzz is dying down, reports are that Google, is about to become the next industry heavyweight to jump into the market. These vendors seem to think that cell phones are a good way to connect with the young, hip buyers who dictate which products are cool and which are pass. However, cell phones are a mature market, one ready to Jump the Shark, and the vendors misreading of the market may benefit medium and small businesses.After its successful IPO and continuing stock run up, Google has been left with two tasks: one enviable and the second unenviable. On the plus side, the company has so much capital on hand that it has money to burn. If new interesting markets seem to be emerging, Google can put together a team of scouts, determine its level of interest, and then attack it. As a result, the company has been on buying spree, forging into areas, such as electronic payments and email encryption, which are far removed from its search and advertising foundation.

Rising expectations are the downside of successful company stocks. The search engine behemoth needs to venture into new fields because all of the investors who have bought the companys overpriced stock expect it to continue to grow at a hyperactive rate for the rest of time. As a result, the vendor needs to broaden its base and collect a bevy of new, potentially high growth, high margin ventures.

Those two factors have coalesced into a sudden interest in cell phones, which have become a status symbol among young consumers. The key 18-to-24 year old demographic has become quite taken with the latest features as well as different calling plans that carriers offer. Google seems to understand that it is a bit late reaching these buyers, so rather than bang heads with Apple, Nokia, and Motorola here in the US, the search engine supplier is talking with Indias first and third largest carriers about picking up its new phone.

Googles entry will put more heat on traditional cell phone suppliers. As the market has been expanding, they have struggled to main their traditional healthy, high margins. But how much growth is left? Cell phone unit shipments passed the 1 billion mark in 2006. At the end of this week, the world population will be 6,614,923,112 according to the US Census Bureau. Does everyone need a cell phone? Probably not even though Google seems to think so. That is good news for medium and small businesses. As PCs passed the 1 billion mark, their pricing dropped while their capabilities increased. If the same scenario holds true, small and medium businesses may see highly functional cell phones selling for $50 rather than a few hundred dollars in a few years. Thank you, Google.

How much does your cell phone cost? Do you think these products are overpriced? Are there any features that are out of reach of your pocketbook? How much would you be willing to pay for them?

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