Google's Enters the Wireless Phone Market: Here's What You Need to Know

By Markets Fool.com

Google made noise in January when a number of media outlets reported that the search giant planned to launch a wireless service in partnership withSprint andT-Mobile.

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The service wouldn't be a traditional wireless play with its own infrastructure. Instead, the company would be offering a service that sends data, text, and voice over Wi-Fi networks when possible and Sprint and T-Mobile's networks when it isn't.

Now, in a speech at Mobile World Conference in Barcelona, Google Senior Vice President Sundar Pichai confirmed that the company is entering the wireless space while detailing how the service will work. He also laid out some of the underlying philosophy as to why Google would enter the market.

"Everything we do, we do at a global scale, and we work with partners to enable a lot of what we do," he said. "When we focus on problems, we want to focus on things that make a difference in people's day-to-day lives."

Wireless phone service certainly qualifies, and it's a market Google is already involved with indirectly through its Android operating system, which powers around 80% of all smartphones, Pichai said.

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Sundar Pichaiis leading Google's move into becoming a wireless carrier. Source: screen shot.

Google doesn't intend to take on the big boys
WhileAT&T andVerizon, the wireless leaders, along with Google's prospective partners Sprint and T-Mobile, should be concerned that a company as large as Google is entering their space,Pichai said that competing on a large scale is not the intention.

"You will see us announce it in the coming months," Pichai said. "Our goal here is to drive a set of innovations which we think the system should adopt."

Heexplained that the company has "always pushed the boundaries of what's next, and we have done that with hardware and software."

Pichai likened the strategy to what the company does with its Nexus tablets and phones. "It's a bit misunderstood outside [the company] as to why we do Nexus devices," he said. "All innovations in computing happen at the intersection of hardware and software. For you to drive the next generation, you need to do both closely together."

The Google exec also noted that it makes Nexus devices in partnership with its OEMs and that they are never done in scale. "Compared to the rest of the industry its a very small scale," he said.

He implied that a wireless service would follow the same model -- big enough to test concepts, but not a major player.

"We don't intend to be a network operator at scale. Our network partners will be the ones who provide service," he said.

He referenced partners multiple times but did not specifically name Sprint and T-Mobile.

Here's how it will work
Pichai didn't offer specific details as to how the service would work, but a report inThe Wall Street Journalsaid it will operate over Wi-Fi using Sprint and T-Mobile's network when needed:

Google's planned service would sift through cellular connections from Sprint and T-Mobile and Wi-Fi "hot spots," picking the best signal for routing calls, texts and data, these people have said. Mr. Pichai said the service aims for seamless handoffs between Wi-Fi and cell networks to prevent dropped calls and automatically reconnect them.

"Hopefully carrier partners, if they think ideas are good, they can adopt it," Pichai said.

Google knows it needs to protect relationships
Pichai was careful to point out how Google values its wireless carrier partners. He also stressed that they have been consulted and involved as the company planned this service.

"We've talked with them about all this," he explained. "We are working with some of these carrier partners to do what we are doing. ... In the end, partners like AT&T, Verizon, T-Mobile, and Sprint in the U.S. are what powers most of our Android phones and the model works extremely well for us."

It's about ideas and innovation
Though lower prices might be a byproduct of Google's efforts, Pichai explained that the goal of the service is more about innovation.

"It's about thinking through areas like how Wi-Fi and cellular networks work together and how can you make that experience seamless," he said. "If two people are making phone calls and your call drops, maybe get connected back automatically -- these are all innovations. We are trying to show what's possible."

Walking a tightrope
Google may not be intending to anger the major phone carriers to protect the Android franchise, but it could happen anyway. The company may say it intends to use the service as a sort of lab, but once it hits the market, things could be different.

The company's intentions may be pure, but entering a space occupied by your partners could result in backlash. Google has managed that so far with its Nexus devices, but there's no guarantee that will continue when the wireless service launches.

The article Google's Enters the Wireless Phone Market: Here's What You Need to Know originally appeared on Fool.com.

Daniel Kline owns shares of Apple. He lives in New England and is tired of the snow. The Motley Fool recommends Apple, Google (A shares), Google (C shares), and Verizon Communications. The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.