Reasons Google May Yet Create a Branded Smartphone or Device

A Google-created and branded smartphone has been rumored for years. TechCrunch’s Michael Arrington gave the idea fresh legs on Monday when he suggested the search king would introduce an unlocked smartphone or a VoIP/Web-enabled Web device to the world early in 2010.

He seems to think this purported device will be sold direct to consumers and by retail partners on an unlocked basis meaning consumers will presumably be able to use it on multiple networks (e.g. AT&T’s and T-Mobile’s GSM networks).

His notions were almost immediately dismissed by the likes of John Gruber, the noted Apple commentator, and PC World among others. Gruber cited a statement from Andy Rubin, made two weeks ago, that Google won’t “compete with its customers”  as proof it won’t get into the hardware game.

Rubin, the company’s head of all things Android, made the statement when asked if Google will create its own branded smartphone.

It’s true that Google, as it stands, works with hardware partners such as Samsung, Motorola and LG among others to bring Android-powered phones to market.

And yak, there are plenty of reasons to doubt Arrington – he’s been wrong many a time. He writes as much for entertainment value as he does for the sake of accuracy. But let me play devil’s advocate. There are reasons to believe Google may one day create a branded smartphone – don’t dismiss the notion just because a suspect story teller raised the idea.

Three reasons (and one opportunity) come to mind :

1) Vertical integration. The fastest-growing smart phones are the ones that are made from the ground up by company. Research In Motion and Apple, the No. 2 and No. 3 smartphone sellers in the world control the development process from soup to nuts, allowing them to create and adapt models more readily some might argue. It’s a good bet that Google has by now noticed the gigantic lead Research In Motion and Apple have accumulated in North America.

2) Executive restlessness. Google, given its dominance of the internet search market, prefers to be No. 1 in any field it’s active in – they’re not even close now when it comes to smartphone operating system share. It’s early days for Android I know but it wouldn’t surprise me if Sergey and Larry are getting restless on the smartphone front. They may want to exert more control over the design, if not the development process, with hopes they’ll produce a blockbuster smartphone like their peers Steve Jobs, Jim Balsillie and Mike Lazaridis did with the iPhone and the BlackBerry. It probably wouldn’t lose partners. Many of Google’s partners have already pinned part of, or all of their immediate smartphone growth hopes, on the Android operating system so the downside for Google is low.

3) Co-optition. This one’s more about opportunity more than motive. Partnerships come in all shapes and sizes. Google’s relationships with its hardware partners aren’t exclusive. What’s to say it can’t also design, if not manufacture, a device itself? It wouldn’t be unlike a tech giant to learn from a partner than apply those lessons in a more self-serving way. Google could do the same to/with its hardware partners.

4) Channel Disintermediation. Google wants to disintermediate a lot of different  industries – why not make the wireless services industry the next target? It makes sense for Google to sell mobile devices directly to consumers in North America. It gives the company the free reign it may think it needs to create a mobile experience for consumers without the interference of those pesky service providers, who are, er, consulted on such matters whenever a phone for their network is introduced. (Oh by the way, that phone is usually “locked” to the carrier’s network too, limiting customer mobility. But I digress.)

A Google-branded mobile device if and when it ever comes could very well meet with indifference. The high cost of an unsubsidized device may also turn off consumers if indeed that’s how the rumored device is sold. But there are a number of reasons for Google to try – don’t discount the notion there’ll be a Google phone or device one day.