Google (GOOG) and Apple (AAPL) turning cell phone Industry on its back

Posted Sep 7th 2007 11:10AM by Georges Yared
Filed under: Forecasts, Rumors, Competitive Strategy, Google (GOOG), Microsoft (MSFT), Apple Inc (AAPL), Motorola (MOT), Nokia Corp. (NOK), Palm Inc (PALM)

Three years ago in August, Google (NASDAQ: GOOG) went public and Apple (NASDAQ: AAPL) was still out explaining to the world what an iPod is. Established cell phone manufacturers and service providers were wrestling with each other for market share and trying to maintain pricing structures. Cell phone companies like Nokia (NYSE: NOK) and Motorola (NYSE: MOT) were trying to figure what the next move would be in the lucrative, up-and-coming Chinese market. The world was good and the lines of division were clear. Now Apple has "revolutionized" the cell phone industry and Google appears to be right on its heels.

The cell phone industry is roughly a billion units per year in size -- that's one billion. Apple stated with the iPhone launch its intentions of "just capturing" 1%, or 10 million units by 2008 year end. What's remarkable about that "minuscule" number is that is comes from a player that was never a cell phone maker nor marketer but was starting from scratch. The really interesting number will be what is Apple's share in two years or three years or five years. The iPhone IS a revolution and now it seems another player is jumping on board -- Google.

Google is rumored to be entering this market soon. Nothing definitive has been announced by Google, which is normal as the company rarely announce anything anyways! But through several indications, the rumors seem to be true. Google has acquired a private company in 2005, Android, for the specific purpose of launching a new mobile platform. The platform could rival Nokia's, Palm (NASDAQ: PALM)'s and Microsoft (NASDAQ: MSFT)'s operating systems and is setting Google up to be a "major player" from day one.

The cellular industry is an evergreen industry. New versions and iterations are launched on an annual basis, plus people lose phones or just get plain-old bored with their existing ones. The cellular industry is undergoing the paradigm shift of becoming the laptop-in-the-hand and not just a simple communication device.

Apple and Google have a powerful brand, especially with the consumer market, which of course is the biggest market in the world. These two companies are emerging as the bellwether technology names for this decade and possibly beyond. Google and Apple have basically taken the reigns from Microsoft, Cisco (NASDAQ: CSCO) and IBM (NYSE: IBM). Both are superbly managed, well-capitalized and ironically, are not the best communicators with Wall Street.

As we look out five plus years from now, the dominant list of cell phone operators/providers will include both Apple and Google in probably the top five to six spots. The world is a changin'...

Georges Yared is the CIO of Yared Investment Research and the author of Baby Boomer Investing...Where do we go from here?

Tags: aapl, apple, goog, google, microsoft, mot, motorola, msft, nok, nokia, palm

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Reader Comments (Page 1 of 1)

9-07-2007 @ 12:24PM

Warren Hayashi said...

Good Morning: Want to check out the latest tricks by cell phone service providers and how to avoid them check out the following article, http://hubpages.com/hub/Avoid_These_10_rip-offs_and_Cell_Phone_Carrier_Tricks.

9-07-2007 @ 1:35PM

Paul Johnson said...

The world's a changin more than you let on. Cellphone service is an industry in decline. Google and Apple will be dominant, but in the field of WiFi/VOIP communications, in 5 to 10 years.

9-09-2007 @ 11:55AM

august said...

Great coverage and a nice, broad sweep for a single article.

Yes, the world (and the "times") they are "a changin,"
BUT... it seems behavior and practice on the part of cellular carriers and related telecommunications industries aren't "a changin," much to keep up with any of this veritable renaissance we COULD be experiencing.

There is a HUGE bottleneck between technological achievement and the corporate understanding, management and distribution thereof. It's as if technology advance and manufacture has to slog through a muddy field to reach the hands of consumers. Sadly, many new products become so weighted in this muck, that they reach the market too regulated, too contractually binding and (worst of all), way dumbed down from what "could have been, should have been."

Hopefully there will be an awakening in Corporate America and there will come a realization that giving the herd what they want, instead of "fleecing the sheep," at every opportunity, is the path to much greater profitability.

Thanks for listening!

August