Future Implications: Why the Gphone will fail

There's nothing quite like rumors. Whether it's the pudgy Nano or the Google Phone, there is always something worth speculating about. But before we start telling the world about the rumored Google Phone (or Gphone as it has come to be known), it's time we consider the environmental factors that will cause this device to be a failure -- if it's real, that is.

If Google decides to break out of its shell and release a new cell phone that some are calling the "iPhone Killer," it will be a huge mistake.

As I've mentioned before, the only way for Google to make any headway in the cell phone business is through the help of the 700MHz spectrum. With this tactic in mind, Google could create its own phone that works like Skype on the spectrum and in the process, kill off the entire cell phone industry. But for Google to throw a device into the cell phone business on domestic and international carriers would not only be a mistake, it could be an indication that Google is getting in over its head.

Now, before Google fanboys jump all over me for saying that this massive company will never get in over its head, think again. The cell phone industry and the hardware business are two places Google has yet to venture. And while I have no doubt that it can create a phone that rivals the iPhone, it needs to understand that the cell phone business is nothing like the online advertising and search industry. Quite frankly, Google has never seen this kind of competition.

Apple succeeded in the cell phone business for one reason: it's Apple. For years, the company has created stylish hardware and has enjoyed a cult following that knows its way around Apple devices. Google doesn't have either luxury. Instead, the popular online company has yet to develop any meaningful hardware products and it certainly has yet to prove itself as a hardware choice. And while I understand that every company must start somewhere, the cell phone industry is the last place any company should begin.

Next time you're at your carrier's store, take a look at the cell phones and each device's price. Chances are, you will find a host of cell phones that are either free or close to it. And of course, the reason for this is quite simple: competition in the cell phone market eclipses competition in any other industry in technology. Simply put, Google may be entering a market that it knows nothing about with a product that may not bring anything substantial to the table.

If Google brings a cell phone to a U.S. carrier, it's in for a rude awakening. Although the company is the leader online, it doesn't mean it will be the cell phone powerhouse. In fact, it doesn't make any sense for Google to get into the cell phone business. Why should it when it's about to win the 700MHz spectrum auction?

Why Google would enter the cell phone business baffles me. As I've already mentioned, the cell phone industry is rife with competition and the market's big shots--Nokia, LG, Motorola and the rest--will surely come out with a phone that can trump the Gphone in a matter of weeks at a price point that is well below the Gphone price.

The iPhone was a device that was (and is) coveted by millions for a few reasons: it was unique, it was from Apple and it was a status symbol. Can the same be said for a Gphone? Without a doubt, the Gphone will feature the same touch screen and functionality of the iPhone with a few more features thrown in. Is this unique? No. Is this from Apple--a proven hardware manufacturer with a stranglehold on the hardware business? No. Will it be a status symbol? I doubt it.

With rumors abound, everyone is getting caught up in the fact that Google may be entering the gadget business. And while it must happen eventually, a cell phone is not the place to start. Like every other cell phone, the Gphone will be derivative, yet useful to many people. But unlike the online business, Google will be met with a significant amount of competition that it wields no advantage over. Cell phones are a different ballgame and if you ask me, Google is ill-equipped to play this game.

Every Thursday, Don picks a current-events topic and discusses how it will impact us in the future. Check out more from Don's Future Implications series.