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Google Goes Mobile

Google's Android 2.0 mobile operating system will get a huge boost from Verizon, which says its Droid phone knows more tricks than the iPhone. Do those tricks include minting money like Apple?

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In just a few days, Google is going to go where many companies have tried, and failed, to tread. It is going to challenge Apple's iPhone face to face, on its own turf, in a serious and big way. Over the last few years, Apple has established its iPhone as the new killer mobile device, rivaling if not surpassing the Blackberry.

And there has been no credible new rival to the iPhone. Until now. Maybe.

On Friday, November 6, Motorola will roll out its latest smartphone, the Droid, running on Google’s open-source Android 2.0 operating system, and hooked into the nation’s largest wireless carrier, Verizon Wireless. It’s the first time one of the top seven cell-phone makers, Motorola, has used the Google mobile-phone operating system, and the alliance with Verizon Wireless gives the operating system its broadest U.S. distribution yet.

The arrival of the new Google-powered device has been taken far more seriously than any other potential usurpers to iPhone's throne. That's because Google is Google—a company that dominates the strategically critical search-advertising market and is using it as a staging ground to attack other markets. (For more on why Google is Google, please see Google Takes on the World.)

Without even one of the phones being sold, the Droid has shaken up the mobile market. It led to a downgrade on Monday by Citigroup analyst Jim Suva of competitors Palm, the maker of the Pre, and Research In Motion, the maker of the Blackberry, and an upgrade for Motorola.

Google’s announcement last week that it would put its own turn-by-turn navigation software on the Droid led to a bloodbath on the market for GPS makers. Stock in Garmin, the GPS devicemaker, fell 17 percent in one day on the belief that Google navigation on smartphones would render GPS devices like those Garmin makes, and the applications they sell for such direction on the iPhone, obsolete.

Verizon Wireless, a joint venture between Verizon and Vodafone, is running a marketing campaign aimed squarely at the iPhone, pointing out shortcomings in Apple’s device compared to the Droid.

But for Google, which gives away its operating system to phone makers and opens it up to additions by independent developers, Friday’s launch is one more step on its road to domination of both the wired and wireless Web. Google wants as many people as possible to use its services, whether they’re on mobile phones or desktop computers. The money, the company believes, will follow in the form of advertising dollars. The better the services, the more relevant the advertising, and the more advertising Google—which derives 97 percent of its revenue from ads—will sell.

“These mobile devices have human-like qualities,” said Google spokesman Gabriel Stricker. They can determine where on earth you are and what’s around you. By determining such data as location, the devices can deliver even more relevant search advertising. “We want those ads to be relevant information.”

And Droid will, of course, support Google’s newly developed Google Voice application, which allows users to synch all of their devices to one phone number.

Eric Shmidt, Google’s CEO, noted during an earnings call last month that Android has taken off as a mobile operating system, and the wireless Web in general holds huge potential for Google’s growth.

Schmidt said the company had seen 30 percent growth quarter over quarter in mobile searches. That’s going to mean more resources poured into the mobile Web by Google, which has the resources to compete with anyone in any space. With a market cap of $169 billion and $22 billion in the bank, Google can pretty much stake a claim where it chooses.

“That’s why we’re basically pushing our rate of hiring, partnerships with wireless and developers, but also we’re going to focus more on strategic deals and acquisitions as we’ve discussed publicly. We’re open for business in making strategic acquisitions both large and small,” Schmidt said.

The Droid is far from the first of Google’s mobile deals, and it won’t be the last by any means. But so far, it’s the biggest.

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