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Will Open Cell Phone Networks Mean Business Benefits?

Cellular phone networks have traditionally been "closed" or proprietary networks, locking your business into carriers for years using the phones they certify. A bunch of technology giants, led by Google, want to change that.
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You’ve surely heard the buzz -- in November, a group of technology giants, led by Google, unveiled an open-source wireless software project, Android, that is likely to result in cell phones with more applications than ever before. But what does it all mean to your business?

Over the short term, it probably won’t result in many differences to the way your business acquires its mobile phone service, say experts. But over the long term, Android is certain to “accelerate the growth of the mobile Internet,” forecasts a recent report by Forrester Research, putting mobile-friendly Internet applications into the hands of many, many more people around the world.

What it doesn’t mean

No, this doesn’t mean Google is getting into the cell-phone manufacturing business. Android is an operating system, just as Microsoft’s Windows is an operating system. Android is the project of the Open Handset Alliance, 35-odd companies in addition to Google, including chip makers, device makers, mobile operators, and software firms. Together, they are looking to developers to help build a better mobile device, allowing them to go after a bigger slice of the billion-plus market of cell-phone users, many of whom don’t have access to PCs. The first OHA-based phones will be available later this year, according to Barry Schnitt, Google’s senior manager for global communications.         

And no, it’s not likely to result in major changes in mobile retail models in the U.S., at least not now, experts say. This is largely because North American consumers are accustomed to paying less than $100 for cell phones and then signing a long-term service commitment, notes Forrester. In actuality, cell phones, especially with all the bells and whistles that Android might help create, can run upwards of $600 (the feature-laden Nokia N95, for example, retails for $699). Small and midsize businesses in particular are unlikely to pay these prices for phones, and then have to shop around for networks that accommodate those phones optimally.

This is one reason why mobile-phone giants like Sprint Nextel and T-Mobile are members of the Open Handset Alliance. They are not afraid of losing customers, because the operators still control the airwaves. They see the project as a way to build a better cell phone with more applications. “We recognize we may not have all the content and apps available that our customers want,” notes Scott Sloat, spokesman for Reston, Va.-based Sprint. “Ultimately, we want more people to use our service, so we’re willing to work with third parties to ensure that.”

But Nokia, the Finnish mobile-phone manufacturing giant, is not a member. Forrester expects that Nokia’s Symbian system is poised to compete directly with Android.

It does mean better mobile Internet and more ads

Google’s Schnitt said it was “too early” to comment on the effects that Android might have on the market, especially given that Android-based phones are still being developed. However, Forrester expects that the project will result in phones whose next-generation mobile applications will not only allow more users Internet access, but allow more customization and localization of the information on the Internet than ever before. Google is in a good position to provide this. According to the Forrester report, “early efforts like Google Maps and Gmail …[are] optimized for maximum performance” on mobile phones.

And, since Google is already heavily reliant on advertising, it is likely to develop new ways to bring ads to the very small screen. This will be a challenge, especially in ways that don’t overly annoy the customer, notes Mark Siegel, spokesperson for AT&T’s wireless unit. Siegel says that AT&T, while not an OHA member now, could join “if it makes sense for our customers.”

Lastly, IT-savvy smaller businesses are likely to see the Android project as a source of new opportunities. “Internet innovators will see in Android the opportunity in mobile that they have long envisioned, accessible in a way they can understand,” says Forrester.




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