Google is planning to release its own branded, unlocked Android-powered smartphone directly through retailers, as opposed to through a carrier partnership, by the end of the year in what could be a huge disruption to the industry’s standard business model, according to an analyst with direct knowledge of the situation.
“The phone will be Google’s first own branded smartphone. It should launch by the end of the year, or soon after, and Google will focus on retailers,” Ashok Kumar, analyst at Northeast Securities, told InternetNews.com.
He said the smartphone would “absolutely” be unlocked, meaning consumers could use it on any network they want, as it would run on the Internet giant’s open source mobile platform Android.
“Unfortunately, we do not comment on market rumor or speculation,” a Google spokesperson told InternetNews.com.
This could have a huge impact on the wireless industry, which now generally relies on exclusive deals between handset makers and carriers to bring new smartphones to market. For instance, AT&T is the sole U.S. network that supports the iPhone, so consumers must subscribe to AT&T if they want to use an Apple (NASDAQ: AAPL) handset.
Kumar, who has spoken to designers involved in the project, said Google (NASDAQ: GOOG) doesn’t have to rely on subsidies from carriers and exclusive deals because it has the “balance sheet” and technological know-how it needs to bypass them and sell a smartphone directly at retail.
“As long as they maintain a healthy ecosystem, and are successful in the cloud, Google’s phone could be the first credible competitor to the iPhone,” he said.
Kumar, however, emphasized that Google will not exclusively sell its branded phone in retail stores, partly to placate partners such as Motorola and Verizon that may be adversely affected by competition coming from an unlocked phone. Still, it’s unclear what Verizon, which just struck a deal with Google to co-develop Android devices, would think of having alternatives available at retail.
Verizon did not return calls seeking comment by press time.
“This is not a 100-yard dash, it’s a marathon. So it won’t be one or the other — just retail or just through carriers,” said Kumar. “It will be a combination. They don’t want to upset partners too much, but for Google, the ultimate goal is control of the cloud, and this smartphone is the Trojan Horse that will lock the customers into their services.”
The news comes just as a bevy of Android-powered smartphones are headed to market in time for the holiday shopping season and as key players in the wireless industry gun for market share in the increasingly competitive sector.
The Motorola Cliq went on pre-sale at T-Mobile this week, while Verizon is expected to begin selling another Motorola handset, Droid, in early November. Sprint also started selling the HTC Hero last week, with the Samsung Moment coming Nov.1.
Meanwhile, Dell confirmed plans for an Android phone by 2010, possibly in partnership with AT&T, and Acer has lined up its Liquid for the fourth quarter.