Verizon Snubs Google's Platform

The cellular giant is throwing its weight behind the Linux-based LiMo operating system, instead of Google's Android, for its mobile phones

by Jennifer L. Schenker

When Google (GOOG) revealed last November that it planned to develop its own operating system, called Android, for mobile phones, and had garnered the support of big names such as Germany's T-Mobile (DT) in an industry group dubbed the Open Handset Alliance, it sent shock waves through the mobile business. Speculation was that the search giant's move would reshape the landscape and aid Google's bid to extend its multibillion-dollar online advertising empire onto mobile devices.

But the mobile industry has long been reluctant to cede the heart of handsets to any scheme that furthers the business model and ambitions of a single company. Android is proving no different: Six months after the initial flurry of announcements from Google and the Open Handset Alliance (OHA) not a single operator has revealed concrete plans to introduce an Android phone.

While major operators don't rule out adding Android-based handsets to their offerings, some already expect them to be niche products. In that sense, they'd be similar to handsets powered by Microsoft (MSFT) Windows—which still amount to just 12% of smartphone sales some six years after they first hit the market—or the Apple (AAPL) iPhone, which for all its buzz may capture just 2% of the global smartphone market, analysts say.

Verizon Wireless Goes for LiMo

Now, in what industry experts describe as a major move, Verizon Wireless (VZ and VOD), the second-largest U.S. mobile operator, have dealt a blow to Google. On May 14 the company said it would throw its weight behind an Android rival created by an organization called the LiMo Foundation. "LiMo really is gaining substantial traction, while Android is increasingly looking a bit out on a limb," says Geoff Blaber, director of devices and platforms at CCS Insight, an independent British mobile consultancy.

Launched in January, 2007, by six mobile industry leaders, LiMo's technology is based on the open-source Linux operating systems and is meant to be an "open platform" that the entire mobile industry can use to power next-generation, media-rich phones that don't cost a bundle. LiMo's original backers included Motorola (MOT), NTT DoCoMo (DCM), NEC, Panasonic Mobile Communications, Samsung Electronics, and Britain's Vodafone, whose 252 million global subscribers make it the world's largest multinational mobile operator.

Verizon Wireless, which will take a seat on the LiMo board, brings the total number of members in the organization to 40. "We will support LiMo in our device line-up and in all our direct retail channels," says Rosemary Garavaglia, executive director for technology at Verizon Wireless. "From a major thrust standpoint, this is where we are putting our resources."

The involvement of Verizon Wireless is especially meaningful. The joint venture of Verizon Communications and Vodafone has created the most profitable U.S. cellular business in part by tightly restricting the selection of devices and applications allowed to run on its network. Over the past year, though, the company has begun shifting toward a more open model to help reduce costly support overhead. Early on, Chief Executive Lowell McAdam said Verizon Wireless was looking at Android (BusinessWeek.com, 12/3/07). So the embrace of LiMo is doubly significant.

No Support For Android

The company now says it will accept Android phones onto its network when they appear, along with any other devices that pass basic certification testing. But it will only provide customer support and services for products that are distributed through its official retail channels—and as of now, it has no plans to sell Android devices in its stores.

"This is not about 'against or for' anything," cautions Garavaglia. "But traction is important to us. The appeal of the LiMo initiative is that there is broad membership from the full [mobile] ecosystem and a number of devices already on the market."

The other draw for Verizon and other major operators around the world is LiMo's promise to enable a new generation of midrange and even low-end phones that can be more easily modified and upgraded to offer the latest whiz-bang features, especially those involving Internet services.

In today's environment, lower-end handsets (called "feature phones" in industry parlance) tend to use inflexible, homegrown software that's nightmarishly hard for handset makers and mobile operators to modify. On the other end of the scale, high-end devices (a.k.a. "smartphones") require serious horsepower to run adaptable but complex PC-like operating systems such as Windows—and thus remain too expensive for mass-market customers. Both LiMo and Android aim to span the gap.