Google phone could be tough sell to U.S. carriers

By Sinead Carew - Analysis

NEW YORK (Reuters) - Google Inc, which is used to dominating the Web search advertising business, may find negotiating its way into the cell phone market a tougher task.

Dealing with America's largest mobile companies, which keep control of devices and features, could force the Web search leader to make concessions that cut into future revenue from wireless, an area Google has long said would be key to growth.

So far no U.S. carrier has confirmed working with Google on a new mobile platform. No. 2 U.S. carrier Verizon Wireless is in active talks about putting Google applications on phones it offers, people familiar with the matter told Reuters.

"There are good useful talks going on and they could result in a deal," one of the sources said.

For months media and analyst reports have said Google might design an entire phone with partners, or offer software that would include its current services such as maps and e-mail.

"If Google is going to make a splash, it's going to have to say (to operators) 'offer our phone and we'll share the revenue'," said Current Analysis analyst Avi Greengart. He sees a Google phone being most successful if it gives consumers a free device or service in exchange for viewing ads.

But for now Google is offering service providers financial terms "somewhere between nothing and only a small proportion," according to one industry source who asked not to be named.

As a result it will have a harder time selling a device or software in the United States than in regions such as Europe where it is easier for consumers to choose their own phone models.