Some killer reasons why GOOG should bid for T-Mobile...

Some killer reasons why GOOG should bid for T-Mobile...

Summary: Google already owns a big chunk of the Internet backbone, why not the end points too? Otherwise, it could be locked out of handsets and services...

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TOPICS: Google, Banking, Mobility
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The potential acquisition of T-Mobile by AT&T [T] is bad news for Silicon Valley with its strong focus on the consumer: search, social networks, and a spectrum of cloud based services.

The reason is that the distributors of all that wonderful Silicon Valley content and services, from Google, Facebook, Twitter, and a myriad other companies, will have to travel through fewer owners of the distribution networks.

And if those distribution networks fail as a level playing field for all -- then innovation in Silicon Valley by both large and small will be drastically curtailed. Startups will have to pay for access to consumers and that will raise costs and the amount of startup capital needed -- it's at an all time low currently.

I'm surprised that Google didn't make a bid for T-Mobile. Here is why:

- The wireless carriers have a big influence on what features and services they will support in handsets.

- If Google search is a click or two away on a mobile device it will lose huge amounts of traffic.

- T-Mobile has been a key partner for Android and the Google Nexus phone.

- Google supports a level playing field for Internet access.

- Google already owns a lot of the Internet backbone, why not the end points where it really matters?

But there are two more reasons why Google needs T-Mobile:

- customer service.

- the monthly billing relationship already established with consumers.

The reason the Nexus Google phone failed was that Google had no customer support. It believed it could just offer the phone online and automated systems would fulfill orders and billing. That doesn't work if you are trying to sell stuff to consumers.

T-Mobile has customer service, and by some accounts it is excellent customer service; and that's in a field where that phrase is considered an oxymoron.

T-Mobile has a billing relationship with consumers, which is very important.

Apple already has a billing relationship with tens of millions of people through its AppStore -- providing a frictionless payment system. Google doesn't.

Letting T-Mobile slip away is a grave mistake by Google. But I can understand why it will happen: culture.

Google's culture is to use algorithms to solve any problem or provide any service. It's a wise strategy in the right circumstances because people are more expensive than servers and software.

If you can just use machines rather than people you will have the lowest business costs.

For example, in the small print of Google News at the bottom of the page you will find this statement:

"The selection and placement of stories on this page were determined automatically by a computer program."

No editors were used. No people were required to make those choices.

This is a key aspect of Google's culture that many observers fail to understand, especially when they propose a Google acquisition of a newspaper, such as New York Times.

But can Google overcome its legacy machine culture and understand that a front-facing people layer, in the form of great customer support, will be important to its future?

Maybe.

Or maybe Microsoft {MSFT] will realize it first and jump into the T-Mobile bidding? (hat tip @johnobeto)

After all, Microsoft has been marginalized in the mobile space. It recently put together a $1 billion deal with Nokia for its mobile operating systems.

Microsoft needs the support of handset makers but it also needs the support of the Telcos.

AT&T is in the Apple camp, and so will be T-Mobile if the acquisition goes through -- further limiting Microsoft's options.

We might very well see a bidding war for T-Mobile.

Topics: Google, Banking, Mobility

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  • I agree Google should have bought TMobile

    But their strategy is a bit different it seems. They would rather have non regulated broadband and TMobs freq are regulated.

    Google let Sun slip by and now TMob, two purchases that would have protected it from any litigation. Now some can rock their boat.

    TMob, its sad if we have to see you go to ATT. No matter how much benefit ATT promises I shall never believe in them again. So being off contract, my choice is clear. Leave asap.
    Uralbas
    • RE: Some killer reasons why GOOG should bid for T-Mobile...

      @Uralbas : No, it's actually a bad idea. The rest of the "handset" alliance would have seen that with suspicion. By not becoming a competitor of the other carriers they have avoided being marginalized by those in favor of iPhone, Windows Phone, and RIM.
      nomorebs
  • Why? Google is not a telecom

    Sun was definitely a good candidate for purchase by Google. But T-Mobile is in no way shape or form a good investment no matter how you look at it.<br><br>You see, what fanboys who would love to see the Google logo on everything completely ignore is the fact that carriers/telcos must comply with a large amount of regulations. If Google ever became a telco they will open the door to being regulated to hell on everything they do, not just the cellphone part. Guess what would happen to everything Google does if they are forced to adhere to red tape and bureaucracy?
    wackoae
  • Missing the point...

    Tom, you didn't seem to acknowledge the major point of this whole acquisition- T-Mobile is not in a position to compete.

    Going forward, it doesn't have the network or spectrum capacity to offer consumers a legitimate alternative to AT&T, Sprint, or Verizon. Therefore, T-Mobile couldn't exist without a huge amount of cash-infusion to purchase expensive spectrum and build-out a more thorough network. (Not considering T-Mobile's grim debt outlook.)

    Google would be buying a 3-legged racehorse, IMHO, in purchasing T-Mobile.

    Now if T-Mobile and Sprint merged with Google purchasing a large interest in the company... Now we're talking!
    lilsim89
  • Our friend has become our enemy

    The single biggest thing Google could do to boost the fortunes of Windows Phone would be to give AT&T and Verizon a reason to view Android as The Enemy. Acquiring a competing wireless carrier would do just that.
    Robert Hahn
  • RE: Some killer reasons why GOOG should bid for T-Mobile...

    Perhaps Apple, Google, Wal-mart and Tesco can do a joint venture company between themselves and globally take on the Robber Baron CellCo's globally.<br><br>As long as they can provide level playing field equivalent and fair access infrastructure, the individual companies could fight it out in a real free market, on the merits of their own products.<br><br>All of them are sitting on mountains of cold, hard, cash, and they have huge retail and web muscle.<br><br>GoogAppWalTes-co Global Mobile <img border="0" src="http://www.cnet.com/i/mb/emoticons/happy.gif" alt="happy"><br><br>Some of the non-cell company owning global Telcoms companies like BT in the UK may be interested too. Perhaps providing the data backhaul.<br><br>Making a start by taking out T-Moble USA would be a significant demonstration of intent.
    neilpost
    • RE: Some killer reasons why GOOG should bid for T-Mobile...

      @neilpost <br>p.s. Tesco Mobile in the UK already do a MVNO Mobile network on the back of O2's (Telefonica) network.<br><br>They sell loads of phones on pay-as-you go, and contract, including full iPhone 4, Android, Nokia ranges from high end, thru middle down to value markets etc.
      neilpost
  • There's a &quot;not quite believable&quot; statement in your blog...

    <b>?The selection and placement of stories on this page were determined automatically by a computer program.?

    No editors were used. No people were required to make those choices.</b>

    If it's a Google algorithm, not available for others to see and scrutinize, then it's likely just as skewed as their selection process for deciding the order of appearance for news and information. Google has a liberal bent when it comes to the news and information, much of which gets prioritized to appear towards the top in search results.

    An algorithm which is programmed by a biased organization, is much more dangerous than all other internet scams.

    Google already gives preferential treatment to liberal news or liberal articles, and, with a delivery system also under their control, we'd have just another biased "network" delivering the news and information, like CNN and MSNBC and the major networks.

    Let's keep the delivery system and the content separate. That's where "net neutrality" would really be of use. Keep the content separate from the delivery system. The Comcast / NBC deal was just as bad, and it should never have been allowed.
    adornoe
  • Fat fish eats lean fish

    Everything quickly (or eventually) becomes unwieldy and basically goes to crap. But only after half the "expendables" (personnel) involved in the deal are dispensed with.

    Wonder how different things would be in the computing realm if IBM gobbled up Microsoft when they had the chance?
    klumper
    • RE: Some killer reasons why GOOG should bid for T-Mobile...

      @klumper We would be using an intelligent system like OS/3 or /4 instead of Windows.
      zclayton2