Google will drive down cell phone costs

Consider this: Google won’t be making your phone.  Nor does it plan to plaster it’s brand on the devices. Instead, it will work with four cell phone manufacturers who have agreed to use Google’s programs in their handsets.  You, the Consumer, will have to buy a new phone to get the Google software because the bundle wasn’t made for existing handsets. But that’s ok right? Most people buy a new phone every year or so anyway.

Given the rush to buy the iphone,  and every other smart phone, what will it be like when the Gphone is released? Even with its market debut months away, Google’s software looms as a significant threat to other mobile operating systems made by Microsoft,  Research In Motion,  Palm  and Symbian, which is owned by Nokia  and several other major phone makers.

Because Google’s software will be free, it could undercut rivals who charge handset makers to install their operating systems. It also promises to make smart phones less expensive since manufacturers won’t have to pay for software. So having said that, the other Smart phone carriers and manufacturers. They can either hold  on to an already ridiculously high price point and get eaten alive, or drop their pricing to be more in line with the new phone.

Google’s system will be based on computer code that can be openly distributed among programmers. That, Google hopes, will encourage developers to create new applications and other software improvements that could spawn new uses for smart phones. Think Open Social.

The fallout from all of this though, positive as it may be, is that we are going to see an all out war when it comes to owning eyeballs and their handsets. The biggest beneficiary? The consumer.

So far, Motorola, Samsung Electronics Co., HTC and LG Electronics Inc. have agreed to use Google’s software in some of their phones. Both Motorola and Samsung already buy Microsoft’s Windows Mobile in some of their phones so the question begs, will Google force Motorola and Samsung to choose sides or can they coexist?

The list of wireless carriers that have agreed to provide service for the Google-powered phone in the United States include Sprint Nextel and Deutsche Telekom’s T-Mobile in the United States. China Mobile, Telefonica in Spain and Telecom Italia are among the carriers that have signed on to provide service outside the United States.

They are among a Google-led group of 34 companies that have formed the Open Handset Alliance. Other key players include major chip makers like Intel Corp., Qualcomm Inc., Texas Instruments Inc., Broadcom Corp. and Nvidia Corp.

“This partnership will help unleash the potential of mobile technology for billions of users around the world,” said Eric Schmidt, Google’s chief executive.

Together, these companies will use Google’s Android platform –(  Steven Spielberg, where are you?)  Google says it will be available under “one of the most progressive, developer-friendly, open source licenses” — to develop new services for mobile devices.

In closing, watch in the coming months as the carriers and handset makers decide how they are going to price not only the new G, but also their other smart phones. They cannot possibly price the device so high that consumers start looking at the iphone as an attractive alternative. Thus this means that other smart phones have to fall in line. But I don’t think Google wants to own just smart phones. They want all consumers to use their bundled offerings on all phones. Not just the high priced smart devices.  Again, know who wins? You.