Google and Verizon Still Far From gPhone Deal

Talk in the mobile telecommunication industry about a possible Verizon-Google deal, where the company Verizon would market Google-developed smartphones, is not exactly true, according to sources in the know about the matter.

The sources said the two companies may, however, reach an agreement sometime in the near future on another issue. The two companies have been talking for a while now about installing a Google-powered search engine on Verizon cell phones. However, there are still a few key issues to be resolved with regard to branding and financial terms, the sources said.

In the event the two companies arrived at such an agreement, it would be a big success for Google. While the Internet giant is a dominant power in the Internet space, it is still to make a significant impact in the cell phone arena.

As far as Verizon is concerned, its dialog with Google underlines one important fact – the mobile communications giant is now aware of the benefits and, therefore, the critical need to provide attractive services and devices on a single cell phone.

According to the sources, the scope of current discussions between Verizon and Google is limited to the need for a partnership to launch the Google search engine on Verizon phones.

As of now, it seems there is not much to be made of an October 31 report in the Wall Street Journal that talked of Verizon coming out with cell phones that would be powered by Google’s latest offering, a mobile operating system called gPhone.

The biggest obstacle for Verizon and Google to successfully arriving at a partnership is money. While Google leverages its position as the leader in online search engines to retain a majority share of the advertising revenue generated through customer clicks, in the wireless mobile environment it really does not have much leverage.

A few years back, another such proposal, involving Verizon and Apple, where Verizon would have sold Apple’s iPhone (it had not yet been launched then), had fallen by the wayside. That time too the key consideration was money.

It is not like Verizon does not have a search engine on its cell phones currently. In fact, it gives customers two such search engines. The two search engines are powered by InfoSpace and Medio Systems respectively. However, they come without specific branding.

The InfoSpace-powered search engine sits at the top level screen of the Mobile Web service offering, while the Medio Systems-powered search engine enables users to search for items featured on the company’s Get It Now service.

While a deal with Google has its positive points, there is also a certain degree of risk involved. Verizon could well end up losing revenue from some of its other applications that allow users to trace information.

Besides, there are other issues involved. While Verizon would definitely benefit from having Google’s name owing to Google’s reputation in the region of Internet search, there is also a lack of clarity currently about how much mileage Verizon would allow Google to draw.