A Big Day for Google 1: Verizon and Google

Lynne Kiesling

I am about to benefit from being an early-but-not-first adopter in the smart phone market! Today Google and Verizon announced that they will be issuing two new phones on Verizon using Google’s Android operating system. I was already planning to leave Verizon in March upon the end of my contract because I wanted to get an Android phone, and ideally I’d like one that I can use in the UK, but perhaps that will happen if Verizon decides not to cripple the dual-band capabilities and SIM-card switching in either of these phones … so I may end up staying with them instead of moving to T-Mobile. Or not; we’ll see …

From an industrial organization perspective, this smart phone space is about to get very interesting. First of all, the variety of phones that are competing with the iPhone is growing, and growing in real competitive capacity. Second, Verizon is moving away from its traditional use of proprietary software, and has conceded that to continue to grow and profit in this industry it has to accept open architecture, so now Verizon says that it wants to be “the open carrier”; they will even support Google Voice. In other words, go for interoperability and make your money off of the quality of service and of end-user interface and design. Third, the fact that one of the Verizon Android phones is an HTC, while T-Mobile and Sprint also have HTC Android phones, opens up  an interesting additional dimension of product differentiation in this market — the differentiator may not just be the phone, it may also be the phone and the carrier-specific (open-platform but customized) interface. Increasingly consumers are interestd in the interface, the apps, how the apps integrate, and so on. The carriers are responding to this by product differentiation.

This will be fun, and consumer-surplus-generating, to watch …