December 18, 2006

Google has reportedly held talks with European mobile phone operator Orange, about an important partnership to create a Google phone which would make it easier to search the Web.

Such a partnership between Google and Orange is seen as a potential catalyst for making Web use of mobile phones as natural as on desktop computers.

Executives from Orange went to Google's headquarters to hold preliminary discussions about a joint deal. The two companies believe that they have an affinity as brands that are perceived as both positive and innovative.

Their proposed plan centres on a branded Google phone, which would probably also carry the Orange logo. The mobile device wouldn't be revolutionary and would be manufactured by HTC, a Taiwanese firm specialising in smart phones and Personal Data Assistants.

Google's new phone might have a screen similar to a video iPod, but it would have built-in Google software which would dramatically improve on the slow and cumbersome experience of surfing the web from a mobile handset.

A source close to the talks said "Google are software experts and are doing some amazing work compressing data so that the mobile user gets a much better experience. They don't know so much about mobiles, but they are eager to learn from Orange's years of experience".

Among the potential benefits are location-based searches. Aware of your handset's geographical position, Google could offer a tailored list of local cinemas, restaurants and other amenities, and maps and images from Google Earth.

It is believed that the Google phone would not go on sale before a year from now.

Google values the expertise of Orange, which is owned by France Telecom, Europe's second-largest telecoms group. A joint deal could be highly lucrative. Google recently became Silicon Valley's most valuable business at £81bn, although it still has a long way to go to eclipse Seattle-based Microsoft.

France Telecom has had a rockier spell, but this year announced sales of £33bn.

Tony Cooper, a telecoms consultant at Deloitte, said: "There are numerous situations in which people say "I wish I had Google in my hand, and I can imagine the younger generation of users would think that a Google phone is a cool idea. It could bring in location-based searches like "Find a Thai restaurant in my area".

Cooper added: "It has a potential to be a success, and to offer commercial success for both companies, particularly if Orange can link it to its broadband offering. If I was Orange, I'd want to get a share of the ad click-through revenues. If I was Google, I'd want a share of the airtime revenue. The potential stumbling block is if it's clunky and hard to use".

Google already offers its search engine and other services on mobile phones. It has a partnership with Vodafone and in November announced a broadband agreement with the operator. It is working to make YouTube, the video-sharing site it bought recently for £870m, easily accessible on handsets.

However, Google is eager to expand in what experts see as a huge potential market, possibly the key to the future of the Web.

Manufacturers such as Nokia and Motorola are working to make the mobile Internet commonplace.

Earlier in 2006, Anssi Vanjoki, executive v.p. of Nokia, said at a product show in New York: "In the mid-Nineties I said that if you don't have a mobile phone you will be making a declaration that you wanted to be outside an organized society. People said I was crazy, but now everybody has a mobile phone. Today I'm saying that in 10 years' time the same will be true if you don't have the full Internet in your own pocket".

A spokesman for Google said: "We don't comment on market speculation and rumour, but we are focused on mobile and there's nothing new in our commitment to that space."

Orange declined to comment.

Source: Guardian Unlimited