Should Google Buy T-Mobile?

Rather than handset comparisons, should we be thinking about free Googlephones that deliver location-based advertising?

The new Nexus One Googlephone may be just the tip of the iceberg. While most of the coverage has focused on how the phone compares to the iPhone and other Android devices, the real importance of Google's entry into the handset game may not be apparent for years.

Rather than thinking of handset comparisons, should we instead be thinking about the Google that buys T-Mobile and gives away handsets that deliver location-based advertising wherever we roam?

That may sound crazy, but not long ago so would the idea of Google's getting into the handset business. And there are persistent rumors that T-Mobile's parent, Deutsche Telekom, would gladly sell or take on a partner at a reasonable price.

That's a future suggested by Mark Russell, a forward-thinking reader from the Atlanta area. Russell recorded a YouTube video (which is embedded below) of his comments in response to my anti-Nexus column posted earlier today.

(Let me be clear: Google buying T-Mobile is speculation, even a suggestion, not something known to be in the works).

Russell makes several points:

Google isn't thinking about today, or even tomorrow, but the day after tomorrow, at least in terms of its technology development and investment.

Google is about making big changes in how we do things, and is already investing heavily in making that happen, especially in mobile and cloud technology.

It's "Near Me Now" maps feature, announced December 7 and described on the Google Mobile Blog is just such a play:

"Today we're announcing 'What's Nearby' for Google Maps on Android 1.6+ devices, available as an update from Android Market. To use the feature just long press anywhere on the map, and we'll return a list of the 10 closest places, including restaurants, shops and other points of interest. It's a simple answer to a simple question, finally. (And if you visit google.com from your iPhone or Android device in a few weeks, clicking "Near me now" will deliver the same experience - [[xref:http://www.youtube.com/watch?v=oXHHkROejik#t=21m05s|video].)"

Russell sees this as an obvious move toward location-based advertising that could support a free or subsidized cellular service, perhaps with free Googlephones handed out by the millions. With Google Voice VoIP and the company could--if it controlled a wireless carrier--provide an almost end-to-end solution for its users (and advertisers).

As businesspeople, we might consider the move to location-based ad delivery as a big win in terms of measurable return on dollars spent. Not all businesses are location-driven, but if you are in a retail, food service, entertainment, or similar business, being able to reach out to potential customers when they are physically close might be very helpful. Expensive, too.

I don't know how the economics would work out, but Russell is thinking ahead of the curve and his ideas at least mesh with areas we know Google is interested in. How many people would say "no" to a free smartphone, even if it were ad-supported?

Granted, ad-supported Internet service never caught on, mostly because it was both heavy-handed and often irrelevant to the viewer.

Google, however, knows enough about its users that a location-based ad service could be so finely targeted that users might actually look forward to its messages. And the ads could be sold to advertisers at a large premium, paying for the wireless service.

Free wireless service? That would certainly expand the company's role as a disrupter of the tech status quo. An argument can certainly be made that Google has no business buying a wireless carrier, but ambitious projects always attract nay-sayers.

David Coursey has been writing about technology products and companies for more than 25 years. He tweets as @techinciter and may be contacted via his Web site.

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David Coursey

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