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The big news on Tuesday, and for the rest of the month in some cases, is that Verizon and Google are teaming up. Considering all the hype, we’ve outlined the press call for you below, with all the facts from Lowell McAdam, Eric Schmidt, and two others in one place for easy access.
No hype. Just facts and comments direct from the source. (IMG: VZW)
Eric and Lowell were in New York when they took the press call to tie into the announcement. “Today we’re announcing a strategic partnership that joins the leader in wireless networks and services with the leader of open platforms and web services,” McAdam, the President and CEO of Verizon Wireless noted when he started the press call.
To recap, the Android platform is coming to Verizon. The partnership with Google means that Verizon will move forward with their plans for an open development business strategy, and according to a Verizon statement, will allow both companies to create, market and distribute products and services that will center on open source applications and feature handsets from any number of manufacturers.
“Together we will co-develop a family of Android based devices. The devices will come loaded with innovative applications from both our companies as well as from third party leading edge developers around the world…Consumers will win from an accelerated delivery of these applications and services,” McAdam said.
“We will work with selected manufacturers around the world to bring on the best devices to showcase these best applications. They can be feature phones, PDAs, Netbooks, or other specialty devices, as required to meet customer needs.”
McAdam moved on to talk about Verizon’s history of open development, which started two years ago when they launched the open development project. Since then, the open development project has grown to include the Open Development Community and the Joint Innovation Lab, with partners including Verizon’s parent company Vodafone, China Mobile, and Softbank of Japan.
He talked about the development of the LTE Innovation Center, which is designed to help with the development of products that will take advantage of the 4G network that is due to launch next year. When it comes to Google, McAdam added that, “Our open environment paves the way for thousands of developers to bring the next generation of services to our customers.”
After that, he said that over the next several weeks, “we’ll begin to announce the initial devices in this family of devices you’ll see from us in the next several years.”
“I think everybody knows, it’s absolutely a fact, that Verizon’s network is the best in the U.S. by far,” commented Eric Schmidt. “I’m not talking ten-percent here; I’m talking by many multiples.”
Schmidt commented that Google was aware of their reach, but they did not know that Verizon would take a “leadership” position on openness. He called it “enormously surprising”, but noted that Verizon is a network engineering company that sweats the details and that they understand scale, “in a way that’s very consistent with the way Google would like to work.”
Overall Schmidt gave a nod to the fact that this partnership was a big deal for Google, and in reality it is. Moreover, for Verizon this is major news as well, because if they are truly allowing an open device on their network, this will be a first for the telecom giant. The announcement will also address one of the major complaints against Verizon, such as the fact that they continually lock down device features on some devices in order to push value-added services. One example of this is GPS, which is often disabled on some handsets so that VZ Navigator can be sold.
Opening pitches aside, the questions from the press pressed quite a few things, and the representatives from Google and Verizon were candid and open. The first question asked if the Google App store would be included on the new handsets from Verizon or if subscribers would have to install it themselves.
After a bit of silence, John Stratton, the Chief Marketing Officer for Verizon said, “We are planning on having the Google Market, the Android Market, installed on the device out of the box.”
Another question, asked plainly if Verizon would support Google Voice. Considering the issues Google had with Apple allowing Google Voice on the iPhone, this was an expected and relevant question.
“Yes we do. You either have an open device or not. This will be open, and we expect to bring that application to market when we bring the first device out,” commented McAdam.
When asked how the announcement with Google would impact the relationship with existing handset vendors who do not have Android in their roadmap, Verizon’s Stratton said, “We have a number of very good and important partners. Our view here is that the market is just expanding very rapidly in this space. If you look back only a few short years ago, the mix of Smartphones in our total sales was about ten or eleven percent. It’s now well in excess of forty percent and growing every month.”
“Our view here is this is a big pie that’s getting bigger every month. We have no preconceived notion about what the mix might be between different devices, we let the market drive a lot of that. In terms of manufacturer support, if you look around the world you’ll see that many of our current partners have already developed or are developing Android devices. So we don’t see any issues there.”
So would Verizon favor an Android partner over a non-Android partner with promotional dollars?
“Yeah, I mean look, I think the market is going to drive a lot of that,” Stratton said. Adding that the partnership was an opportunity for Verizon to create leading edge innovation, and by devoting resources to this project Verizon will accelerate that. “So I think that creates great demand, and our expectation is that demand is what’s going to drive device buy-ins.”
After that, TechCrunch asked how many Android devices will be launched this year by Verizon and how many devices are currently in consumer hands.
McAdam said that there will be two devices launched this year. “Which will just be the beginning of a multi-year roadmap,” he said. “Our view is that this is a family of devices, it’s not just a Smartphone or a PDA. There will be lots of opportunity to expand the lineup over the next several years together. While Eric and I certainly have in our minds that we’ll have multiple devices per year, we don’t really have a hard target at this point. We’re going to be very attuned to what the customers want, and we’ll make sure the applications are leading edge and the devices brought out highlight those applications.”
Andy Rubin, Google’s VP of Engineering for Android, took TechCrunch’s second questions by noting that Android as an open source platform is organic in its distribution. “So it’s actually relatively hard to track how many devices are in the market,” he said. However, he did note that there are nine different phones in the market and with Verizon’s announcement there will be two additional ones coming soon.
Will this announcement of a deal with Google impact Verizon’s relationship with Microsoft?
“I mentioned before, we have a lot of very valuable partners here. We don’t see expanding business opportunities with one as necessarily taking away from another,” Stratton said. “From our perspective, again, I’d like not to characterize this relationship as being something that’s necessarily going to run counter to someone else’s goals and objectives with Verizon.”
Is there any plan for revenue share? How will Google monetize this newly announced partnership?
“Google views the handset business as an extension to its core business, which is advertizing,” said Rubin. “It’s just, for us, a scale thing. If you think about how many internet connected PCs there are out there, there’s about 2 billion internet connected PCs. Obviously there’s many more phones, so the real opportunity for growth is in the handset platform.”
“I should also mention that, as you use your phone, the way you use your phone - you interact with it. It’s a more personal experience. You bring it with you all the time, and its mobile with you. So location services become more important, and obviously that’s something we’re already monetizing.”
What is driving the timing of this decision? It seems that the announcement comes at the same time that the FTC has been making a lot of remarks about net neutrality. Is this announcement a response to the FTC getting more involved on that front?
“I think one of the worst things you can do is manage your business by what’s going on in the newspaper or what may be going on in Washington,” remarked Lowell. “Eric and I from the very beginning, talked about how we can build something that will be exciting to customers.”
McAdam told the story about a meeting eighteen months ago, when he and Schmidt discussed how the two companies could team the innovation of Google with Verizon’s network and distribution, while pulling in every device manufacturer and every applications provider around the world together to meet customer needs. In short, the announcement from Verizon and Google has nothing to do with anything the FTC has been up too lately.
Overall, the announcement from Google and Verizon will mean big things to consumers. However, with the pending launch of Verizon’s LET (4G), the changes will come year by year for the most part. There should be no expectations that things will change overnight, but changes will come. That’s certain.
The question will be how this partnership will impact business for AT&T and T-Mobile, as well as Sprint. Two of them offer Android devices, but they don’t have the network or reach that Verizon has. The only answer to that will come by watching and waiting. One thing is for sure, 2010 will be an interesting year for the mobile market.
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