Google Phone is in the works, say insiders

SAN FRANCISCO (Reuters) - Google Inc. is developing its own mobile phone, according to industry insiders and analysts, while a Google official in Spain last week acknowledged the company is "investigating" such a project.

Google isn't commenting directly on leaks from Europe and the United States which describe a low-cost, Internet-connected phone with a color, wide-screen design. Newspaper and blog reports in recent months have Google shopping its phone design to potential mobile phone manufacturing partners in Asia.

"Mobile is an important area for Google," Google spokeswoman Erin Fors said on Friday. "We remain focused on creating applications and establishing and growing partnerships with industry leaders to develop innovative services for users worldwide. However, we have nothing further to announce."

Gadget enthusiasts who only two months ago were obsessed with the potential revolutionary impact on the phone industry of Apple Inc.'s iPhone device -- due out in June and at prices starting at $500 -- have shifted their attention to whether Google is developing an even lower-cost phone.

"We obviously need another mythical mobile to drool over and speculate about -- and the natural candidate is, of course, the so-called Google phone," geek hardware site Engadget wrote earlier this month tinyurl.com/3b7bow.

To be sure, feverish speculation about Google products has been wrong before. Google was widely reported to be building its own line of personal computers a little over a year ago. What in fact materialized was a set of free software programs designed to make any existing Windows PCs easier to use.

But Richard Windsor, a phone analyst with brokerage Nomura in London, told clients late last week that unspecified Google representatives at a major European conference in Germany had confirmed the company is working on its own phone device.

"Google has come out of the closet at the CeBIT trade fair admitting that it is working on a mobile phone of its own," Windsor said in a note entitled "Google Phone: From myth to reality."

"This is not going to be a high-end device but a mass market device aimed at bringing Google to users who don't have a PC," he said.

Over the past year, Google has branched out beyond computers to bring Web search, e-mail, mapping and other Web services to millions of new and existing phone browsers worldwide. Rivals Microsoft Corp. and Yahoo Inc. also are racing to run Web services on mobile phones.

Simeon Simeonov, a Boston-based venture capitalist with Polaris Venture Partners, said in a March 4 blog post tinyurl.com/2z23o7 that an "inside source close to the company" had informed him that Google was developing a "Blackberry-like, slick device."

The device Simeonov describes could handle voice over Internet phone-calling. He said it is being developed within a 100-person mobile phone group at Google that includes Andy Rubin, the creator of Sidekick, a popular phone/Internet device that he developed at a prior company he founded, Danger Inc.

Lending further clues, Isabel Aguilera, head of Google's Iberian operations, was quoted last week in Spanish news site Noticias.com as acknowledging the existence of a part-time project by some Google engineers to develop a mobile phone.

In her interview at tinyurl.com/2feypv/, translated from Spanish, the Google executive said her company "has been investigating" developing a mobile phone that works both as an Internet access device and as a way to extend Internet use to emerging markets customers.

In January, Engadget circulated a photo purporting to be a prototype Internet phone with a wide, color screen designed by Google and built by Samsung Electronics Co. Ltd.. This unconfirmed report replaced an earlier theory published by The Observer in December that Google was working with Taiwan's High Tech Computer Corp. (HTC) on a mobile phone.

A source at a rival Internet company who has talked to the same mobile phone manufacturers said on Friday that "Google is going to build their own phone, whether it is with HTC or Samsung or some other ODM (original device manufacturer)."

Windsor, the London-based Nomura analyst who tracks mobile phone handset makers like Nokia of Finland, argues that a Google Phone "will meet with limited success and lose money" because it lacks the necessary phone industry relationships to reach the massive scale needed to compete.