Will developers pledge allegiance to Google mobile?

By Yi-Wyn Yen

Sergey Brin this week promised developers that Google’s new Android mobile technology platform will let them create exciting software for cell phones, much like he and Larry Page were able to build “incredible things” for the web a decade ago. Mobile developers, though, are still waiting for a viable market for their products.

Google (GOOG) on Monday will reveal specific details of its Linux-based Android platform and allow coders to begin building applications. Mobile speech recognition company Nuance, which joined the Google alliance, says developers will significantly benefit from a standardized platform.

Others are more skeptical about Google’s plans to deliver more innovative applications and links to the web. Microsoft’s (MSFT) Window Mobile and Symbian, whose operating system is backed by No. 1 phonemaker Nokia, both have accessible platforms for third-party developers.

“Google isn’t going to save mobile. Google needs to compete, and it’s sort of late to the OS game,” says senior analyst Seamus McAteer of M Metric. “Just saying it’s open and it’s going to work and Kumbaya isn’t anything groundbreaking. There’s no sign yet that Google is doing anything disruptive that will force the way the mobile business is going to be restructured.”

Google’s announcement was received by third-party developers with modest enthusiasm. Unlike Facebook, which then had a captive audience of 24 million members when it announced last spring that it was opening up its platform to third-party developers, Google’s Open Handset Alliance has no current mobile users. It must also convince mobile developers to create widgets for phones that won’t be released till the second half of 2008.

• Verizon and AT&T no-shows at the Google party

So far, Google hasn’t revealed plans for how third-party developers will be able to make money. Andy Rubin, the director of Google’s mobile platforms, insists there won’t be an ad-driven cell phone for awhile, but that may be one of the biggest drivers for independent developers. Currently, they rely on subscriptions, one-time payments, and licensing fees to distribute games, music, and web applications on mobile phones. Often they split revenue with the carriers who certify their software and promote it on their handsets. About 9 percent of U.S. cell phone subscribers downloaded premium content from July through September, according to M Metric.

“Google’s opening up the possibility of an ad platform,” says Forrester Research analyst Charles Govin. “The opportunity to deliver meaningful advertising on mobile phones is what’s at stake.”

Distribution will be a big challenge for third-party developers. While Apple (AAPL)’s iPhone has made it easier for consumers to surf the Internet and download web applications, the audience for third-party developers is just over 1 million people. Compare that to the 50 million Motorola (MOT) Razrs that consumers bought in the phone’s first two years.

“In order to evaluate the Google platform, you need to see how many [handsets] they’ll ship,” says Chris Dury, a marketing executive for Scanr, a web-based service that converts mobile pictures into text files. “Are they going to have a hit phone in the right price point that’s available on a large number of carriers? It’s a bit early for developers to evaluate whether or not they should join.”

Carriers also complicate the matter of just how open the Android platform will be. Alliance member T-Mobile (DT) say it will maintain some flexibility as to which Android-based applications will be allowed to run on its network.

Sprint (S), another Google ally, takes more liberal view of the Android platform. “Customers will be able to download any service that they want and personalize their phones however they want,” says Kevin Packingham, Sprint vice president of product development.

The U.S.’s No. 1 carrier, AT&T (T), and No. 2 Verizon (VZ) ) have yet to join forces with Google. Verizon has actually reduced the number of applications available this year to focus on the most popular ones. “It’s hard to get noticed on the Internet,” says Alex Poon, CEO of Bonfire Media, which makes a third-party application to run eBay auctions. “Carriers do a good job of promoting what’s available on the handset because there’s so little room on the phone to show anything,”

“Google may be creating a giant sandbox for developers, but the best applications will be hurt because it will be diluted with a lot of junk,” he adds. “The percentage of what is good goes down because of what applications are made more available.”

Sprint’s Packingham says that the Google mobile model is no different to what’s happening on the web. He says, “People will self-select. The goal is that the cream of the crop will rise to the top.”