Google cellphone software announcement disappoints

Google made its expected mobile announcement, but in an unexpected way. The company announced it was developing a free cellphone software package designed to move cellphones from voice instruments to portable terminals on the web, through what Google calls the “Open Handset Alliance.”  The Google move won guarded support from the FCC’s Martin, but otherwise disappointed many analysts and Google watchers. While the move does not preclude the announcement of a gPhone, we think it may indicate that Google cannot come to terms with incumbent mobile operators under the current conditions, and is seeking to build its market share in the mobile platform space to make itself a more attractive partner. Our sources say that Google wanted a better deal than Apple, and that mobile opeators felt Google had nothing on the table to justify such a concession.