Motorola Corp. (NYSE: MOT) is apparently planning on a rather large piece of its wireless business being wrapped around Google Inc.'s (NASDAQ: GOOG) Android operating system. The wireless company already has 50 employees working on Android development and will be boosting that number to 350 before long. Since Motorola is one of the larger members of the Open Handset Alliance (OHA), the open-source software movement meant to support all things Android, this comes as no surprise.

Perhaps Motorola wants some revenue from software development for the mobile space instead of selling profit-challenged hardware? The company has had a rough time of things recently, but after spinning off its handset division soon, Motorola wireless hardware and software may be on the path to re-inventing themselves.

But can Google's vaunted wireless platform challenge the entrenched iPhone, Windows Mobile and Symbian space? Together, those three platforms control a huge swath of the smartphone market. Nokia Corp. (NYSE: NOK), which now owns all of Symbian, has the lion's share of smartphone software sales globally. The newer iPhone 3G has launched in dozens of countries and continues to sell very well. Let's not count out Windows Mobile. Even Google may find it hard to take large pieces of market share away from these players. But at least Motorola is only placing a small bet here on Android's success. Three hundred fifty employees isn't too many, is it?

Please join me later today when I will be live blogging Google's earnings:
Where: Google Earnings: Live Blog
When: 4:00pm EST


If IBM (NYSE: IBM) gives us any clue as to the technology sector's ability to maintain insulation from the financial chaos we have been dealing with, we may see a glorious rebound for Google shareholders. But remember: IBM actually sells tangible products and services that can be bought with non-dollar currencies. In yesterday's earnings release, IBM Global services was reported as the top revenue generator for the period. So, it is possible that the strength of foreign currencies helped to provide a good portion of IBM's profits.

Perhaps Google will be able to capitalize on some of the currency exchange benefit; but probably not with any real significance. This is just one of the line items that we are going to find out after the close.

Google (NASDAQ: GOOG) launched its new Android cellphone software with a big PR blitz. The new system would allow thousands of developers to write applications for handsets. The operating system would open up a closed system that had allowed cellular carriers to dominate what features people could get on their phones.

The plan may have run into a wall. There appear to be a number of bugs in the developer software for Android, which are driving developers trying to build applications for it crazy. According to The Wall Street Journal, "Google said the software kit it released last month amounts to an 'early look' designed specifically to get developers started as soon as possible and to elicit their feedback."

The feedback is ugly. Google says it is cleaning the software up.

The NPD Group released its quarterly run-down on the mobile phone industry. The research organization, known for its comprehensive consumer and retail information, looks at quarterly sales numbers and compares the findings to its own historical numbers.

There is definitely some salient info for investors looking at or in the mobile phone market:

• Smart phone are on fire: "the percentage of smartphones sold during the third quarter increased from 4% of all phone sales in the third quarter of 2006 to 11% during the same timeframe in 2007 – an increase of 163% year over year."
• Convergence of musical devices with phones: "Fifty percent of new phones were able to play music in the third quarter of 2007 (double the prior year) and 11 percent were smartphones."

"The mobile phone market is not only growing, it is growing smarter," said Ross Rubin, director of industry analysis for NPD. "The nearly threefold increase in smartphones shows that this once negligible niche is becoming a more influential force in the consumer market -- attracting entrants such as Apple, Inc. (Nasdaq: AAPL) and the Open Handset Alliance."

While Motorola, Inc. (NYSE: MOT) commanded the largest marketshare of the top 5 manufacturers at 31%, growth in the industry (47% year over year) is jacking up the competition. Apple has made a splash with the iPhone and its going to be interesting to see what route Google, Inc. (Nasdaq: GOOG) is going to take with its rumored gPhone. Read Sheldon Liber's good analysis of what Google may be planning to do with a mobile platform.

As the iPhone gets more traction, it will be interesting to see what NPD's analysis will look like in a year from now.

Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Disclosure: He holds a position in GOOG but none in the other stocks mentioned.

MAJOR PAPERS:

• Google Inc (NASDAQ: GOOG) may have plans for a gPhone, but their real objective is to run their own mobile network, reported the Wall Street Journal. The company is reportedly looking at a $4.6B wireless network bid.
• Abu Dhabi's Mubadala Development may look to take a 9%, or approximately $700M, stake in Advanced Micro Devices Inc (NYSE: AMD), the Financial Times' Alphaville blog noted. An investment may draw the attention of the U.S. committee on foreign investment.

OTHER PAPERS:

• According to Business Week's "Inside Wall Street" column, the patent Biodel Inc (NASDAQ: BIOD) was granted in September for its VIAdel technology was "key," as it opens up markets for products estimated at $2.3B.
• Glass container maker Owens-Illinois Inc (NYSE: OI) is defying the current market tumble due to earnings momentum, reported Business Week's "Inside Wall Street" column.
• According to BW's "Inside Wall Street" column, some money professionals are "snapping up" shares of retailer Staples Inc (NASDAQ: SPLS) despite the housing slump, credit crunch and rising gas prices.

Google, Inc. (NASDAQ: GOOG) said this week that it sweetened the pot on the hotly-anticipated "Android" mobile operating system platform announced last week. The sweetener? Offering cash prizes to Android developers who build applications for the new, open-source mobile platform.

Google is obviously trying to get as many quality developers on the Android platform as possible right from the start so that it can compete better with established platforms like Microsoft Corp.'s (NASDAQ: MSFT) Windows Mobile operating system. Although Google says it's not competing with any established platform -- but merely offering an open-source alternative -- that's the company's strategic mantra. After all, the "non-competition" it always claims is a ruse. Google is one of the most competitive companies on the technology landscape today.

The developer rewards program -- dubbed Android Developer Challenge -- is not something out of a sci-fi novel and will feature cash prizes ranging from $25,000 to $275,000. That is enough to encourage any developer to get on board. With Google having set aside $10 million just for the prize pot, and with many software developers preferring the open-source idea in the first place, Google may score another hit on the way to recruiting some fantastic programs to launch Android with next year.

While Google Inc. (Nasdaq: GOOG) is the undisputed leader in Internet search, the company hasn't done much on the wireless front. Then again, it's a tough market to crack (and, by the way, many companies have failed in the effort).

As a result, Google has had to take an innovative strategy – that is, building an open software platform known as Android. In fact, today the company released the software development kit (SDK). There is even a promotion for $10 million in prizes for developers.

To get some perspective on things, I had a chance to interview Frank Dickson, who is a principal at MultiMedia
Intelligence.

As expected, the Google plan has received a lot of attention. But how important is this?

Although Apple, Inc. (Nasdaq: AAPL)'s iPhone has been in vogue, the Google announcement is the most significant announcement in the wireless industry of the year. It is bringing an open platform to the handset to allow for a global ecosystem of development of applications for handsets. These applications are not only client centric applications, but also network centric applications, allowing the handset to essentially become a thin client for some applications.

Let's also not underestimate the advertising possibilities to allow for the replication of many viable Internet business models on the handset.

Mobile can be a tough space to crack. What are the challenges for Google?

Building critical mass is the most significant issue. Metcalfe's law states that the value of a network is proportional to the square of the number of users of the system. The principle applies here. The ecosystem approach
adds value only if the number of users is significant enough to justify development. If it Google does create critical mass, the Gphone would as significant as ISDN.

What might this mean for other software players in the mobile space?

For most application developers, it provides a common and ubiquitous platform that will greatly increase their total available market. It may be unnerving to many of the existing incumbents. However, the Google Android platform does not necessarily imply that smart phone OS is unnecessary. It will be important for the incumbent OS players to integrate the Android functionality while continuing to add value with handset client features.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Every day, there is something new in the news about Google, Inc. (NASDAQ: GOOG). The company has spent the better part of 2006 and all of 2007 preparing an "Act II" to ensure the constantly growing revenue heap if receives from text-based internet advertising doesn't lead to the "all eggs in one basket" scenario that has worried many shrewd industry watchers and investors for years. While Google's revenue from internet advertising is still growing every quarter by leaps and bounds, the company needs to share the love into other areas. Well, the revenue love, anyway.

Google has signed more high-profile advertising partnerships this year and just recently released details on what I consider to be one of its most ambitious projects to date -- the mobile phone operating system. Google, always the one to wrestle tight control from the corporate shaft-meisters and give it to the people, wants the mobile phone to be an open standard usable by any customer on any device.

Android. What an odd name for a mobile communications software application suite. The name smacks of something independent and powerful. Perhaps it's not a misnomer after all. This could be the start of something quite unfamiliar in the world of subscription cell phones. I want free access to multiple wireless carriers.

Google (NASDAQ: GOOG), has declared once and for all that today's mobile phone is to no longer be a simple communications device. Google, it would seem, has determined that your cell phone is to become your one umbilical cord to the world . Google wants your cell phone to be more than just an extension of your personality (as if it wasn't already). That is why Google wants your cell phone unleashed. Google wants the pipe line opened up for pumping personalized advertising at you right where you live. I believe that Google envisions the day when wireless air time is given away to consumers and paid for by advertising sponsors just the way most television worked not so long ago.

I believe, now that the cat is actually out of the bag, Google is going to put serious pressure on the wireless communications industry to change their business models from subscription based survival to active air time marketing based on their numbers of subscribers. Gradually, subscription fees will die as vendors compete to increase the value of their air time by adding eyes. Are you taking notes on this Microsoft (NASDAQ: MSFT)?

On the consumer side, mobile communications air time sells cheap and is even sometimes given away. Put an advertising sponsor via the Internet on the source end and you could see that air time suddenly becoming extremely valuable. Is it just Google that figured that out? There could possibly arise a problem involving a public back lash against unrequested advertising showing up on their phones but I'm sure a couple of "free phone, free minutes" promotions would chill all that noise real quick.

We want free access to multiple wireless carriers and we want it now. We can thank Google if it happens.

In the world of Google Inc. (NASDAQ: GOOG), each passing day brings more news about some added feature, idea, business partnership or gadget, and today it is no exception. Despite much hype that Google would be announcing the "gPhone" today, instead: "Google along with 33 other companies are announcing Android, the first truly integrated mobile operating system." What's particularly notable is that it's available under a mobile open source license.

This is becoming very Google-esque -- a major partnership announcement! Google watchers (and shareholders) can appreciate that Google does not want to be in the hardware business, at least not right now. The company is in the partnering business. It has made the very wise decision to create as many partnerships as it can, attractive to both parties given that partners will make money by working with Google, without a new cost. Its selling point to Internet users: we are the nice guys and we bring you so many features that make your life easier and fun (sounds like Apple Inc (NASDAQ: AAPL)). How can someone resist that?

Google hopes to create not 'a' new platform for cell phones, but 'the' new platform for cell phones. In doing so the company will be expanding the Google universe.

If you haven't heard of the GPhone, listen up! That's because TechDaily reports Google Inc. (NASDAQ: GOOG) is shipping 50,000 of them.

The GPhone is supposedly being made by a company in Taiwan. A UBS analyst has confirmed that Taiwanese handset manufacturer HTC will ship about 50,000 cell phones running on a mobile operating system made by Google by the end of 2007.

Benjamin Schachter, one of the analysts who worked on the report, said that these 50,000 Gphones will not be sold to the public -- instead they're going to be available for developers only to understand how the software works. Shachter thinks Google will offer more details at an October 24th analyst event.

I wonder whether an Apple Inc. (NASDAQ: AAPL) representative will attend that event...

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Google, Inc. (NASDAQ: GOOG) likes to make the most complex thing you'll ever do into the most simplest task. Much of the planet knows how easy it is to use Google's market-leading search engine, but the talent and technology to make that possible would be mind-boggling to many of us.

If you've used a cellphone in the last year, you're probably aware of how complex that category has become. In standard fashion, cellphone makers and wireless carriers both are cramming more features into wireless phones these days as a way to recruit more customers. Long gone are the old differentiators like coverage area and minute packages, and in are MP3 players, streaming video and amazingly complex user interfaces for even the most basic of cellphones. Google wants to change that, and apparently it won't bother with yet another handset that would just get lost in the fray.

No, Google's simplistic approach, as it always has been, may be in the software that powers these devices instead of making the hardware itself. Right now, Microsoft Corp. (NASDAQ: MSFT) makes the Windows Mobile operating system for advanced wireless phones, but it's laden with overkill for most of us. Yes, we all want email and multimedia applications on our phones, but we can do without the complexity current solutions have to offer. If Google were to license or give away its mobile operating system technology to manufacturers and have a say in the design itself beyond the software -- and support the effort using in-phone advertising of some sort -- the world of cellphones could change for the better. If we thought the Apple, Inc. (NASDAQ: AAPL) iPhone was "revolutionary,'" then maybe the 'gPhone' could be one step beyond that.

Google Inc. (NASDAQ: GOOG) recently trading up $15.29 to $609.20.

GOOG is expected to report earnings per share (EPS) on October 18th. GOOG October at the money 580 straddle is priced at $32.10. GOOG October option implied volatility of 38 is above its 26-week average of 27 according to Track Data, suggesting larger risk.

The Gap Inc. (NYSE: GPS) CEO Glenn Murphy hosted a meeting with analysts on October 5th.

Smith Barney says "Mr. Murphy is focused on making the company gets an adequate return on its investments. This includes a focus on the expense of the business. We suspect there will be continued focus on moderating the cost structure and assessing various cost components, including marketing. We think the real estate portfolio is under review." GPS over all option implied volatility of 31 is near its 26-week average according to Track Data, suggesting flat price risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Apple, Inc. (NASDAQ: AAPL) was recently up $3.60 cents to $157.11.

AAPL is expected to report earnings per share (EPS) in mid-October. AAPL October option implied volatility is at 31 and November is at 39, below its 26-week average of 42 according to Track Data, suggesting decreasing price risk.

Google Inc. (NASDAQ: GOOG) was recently trading up $13.64 to $580.74.

GOOG is expected to report EPS on October 18th. GOOG October at the money 580 straddle is priced at $33.10. GOOG October option implied volatility of 31 is above its 26-week average of 27 according to Track Data, suggesting larger risk.

Volatility Index S&P 500 Options:

VIX decreased as Dow Industrials got above 14,000, down .59 to 17.39. The 10-day moving average was 18.78 according to Track Data.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

That is the question for Google Inc (NASDAQ: GOOG), regarding their rumored phone, which DigiTimes says is "definitely" on its way.

On one hand, launching the phone with 3G would delay it until the first half of next year, meaning the phone would miss the key holiday shopping season and give the Apple Inc (NASDAQ: AAPL) iPhone that much more of a head start. On the other hand, the biggest complaint about Apple's iPhone has been the subpar service on AT&T Inc (NYSE: T), which does not use 3G, so launching a consumer smartphone with 3G could be a huge selling point for Google.

In addition to Apple, the decision will also affect the technology companies that produce these parts. Originally, Google was rumored to be using EDGE technology for the phone, from Texas Instruments Inc (NYSE: TXN), but if Google decides to go right to 3G, then Qualcomm Inc (NASDAQ: QCOM) could be the big contract winner, according to DigiTimes sources.