Jeff Kagan: Analyst on Google Project Fi Wireless

Jeff Kagan |

Google_Phone.jpg

As a pretty well known wireless analyst, I've been lucky to get to write about and tell you my thoughts on different new technologies and offerings for the past several years. Last week, Google Project Fi was launched, and to tell you the truth, I am scratching my head with this one. I was expecting something big, but there is no there, there. Nearly every wireless network and handset maker makes sure I am briefed on their strategies and thinking so that I can discuss these strategies with the media, and in my columns. But to tell you the truth, while I like Google Inc. (GOOG) , I just don’t get Project Fi.

Remember that great Wendy’s (WEN) television commercial from the 1980’s, where that dear old granny Clara Peller asked, "Where’s the beef?" That same question has been on my mind since Google’s announcement last week. 

Where’s the Beef, Google? 

I honestly thought Google was going to blow the doors off and try to rewrite the rules of wireless. Similar to the way they changed the field when they introduced the Android operating system for the handset several years ago. That didn’t happen.

Should we conclude that maybe Google does not fully understand marketing, advertising and public relations?

Last week's introduction of Google Project Fi was a disappointment. And the mistakes they made will make it harder for them to regroup and be relevant in the marketplace they wanted to change and to own.

The audience was seated, the stage was set, and all Google had to do was WOW the crowd with an industry changing announcement. We’ve been talking and speculating for months about Project Fi. Google should have leveraged that energy and excitement and built on it. This could have been a real event. You would think they would have worked their marketing magic and created a really big splash that would reinvent the way we think about wireless.

That’s what I, and frankly, everyone else expected. Unfortunately, that’s not what happened. I was expecting something big and transformative, but the first skyrocket turned out to be a dud.

Don’t get me wrong - I like Google. I respect what they have done over the last decade, and how they have stuck their foot into many different industries and segments. They are trying to rewrite the traditional rules we have lived by forever. True, sometimes they cross the line, but they also give us so much.

However, when it comes to an announcement of this magnitude, I expected so much more than what we actually got...I think we all did.

The world was watching. Google had an incredible breakout marketing opportunity. They could have redefined the wireless space with this announcement. That’s what we were expecting, but that’s not what happened.

Where Google Project Fi Missed

One, the price is no better than what is already in the marketplace from a variety of competitors...so there was nothing new here.

Two, the phone they will market is their Nexus device, which has been one of the big sleepers. It does not hold a candle to the Apple, Inc. (AAPL) iPhone or Samsung Electronics Co (SSNNF) Galaxy, which uses the Google Android operating system. This was a disappointment.

So what’s new and different? The biggest deal I can see is that the Google brand is now on a service, not just a handset. That will let Google compete with other wireless networks like AT&T Inc. (T) Mobility, Verizon Communications Inc. (VZ)   Wireless, Sprint Corp (S) , T-Mobile US (TMUS) , Tracfone, Family Mobile from Wal-Mart Stores Inc. (WMT) using the T-Mobile network, and so on, not just handset makers like Apple iPhone and Samsung Galaxy.

These carriers are all successful. Can Google compete against them?

Google has been trying to win at wireless for years. Their Android operating system is a winner. Their Nexus device is not. So the jury is out on whether Google Project Fi will succeed or fail.

A Brief History of Failure in the Wireless Sector

The Google Nexus handset is designed to make calls and log on to wireless data by first looking for a Wi-Fi signal. If there is no Wi-Fi signal, it will default to either the Sprint or T-Mobile network. While this is interesting and a potential win for Sprint and T-Mobile, it’s not the kind of stuff that will help Google sell phones and build market share in this industry.

Remember, other non-wireless companies tried and failed to enter this business as well. Remember Facebook Inc. (FB) and Amazon.com Inc. (AMZN) ? Everyone got excited about their entry as well, until they failed and disappeared.

The same thing happened with cable television companies Comcast Corporation (CMCSA) , Time Warner Inc. (TWX) and Cox, all of which failed to make headway in wireless, and quickly exited the sector.

As you can see, success in wireless is not easy. It has only been achieved by a select few, either on the handset side or the network side. I hope Google is successful, because we can always use more competitors who can shake things up in the marketplace. It keeps us on edge, and keeps innovation flowing, which is good.

However, so far, Google has not done a good job with their entry. And the entry is important...it creates a framework, which the marketplace understands, and allows analysts to judge its success or failure going forward.

Competing Carriers Will Be Watching

Even though Google was not successful with this introduction, I can assure you that all carriers will still be watching closely, just in case. You don’t ignore the Google threat. And if they are successful, they could be a threat.

However, so far at least, if this was Google’s opportunity to create a new way of thinking about them and about wireless, I think they missed...big time. There's no there, there. Not yet, anyway.

Equities.com columnist Jeff Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst and consultant. He shares thoughts on the changing industry, which he's been following for 25 years. He follows what's hot, what's not, why and what's coming next. Email him at jeff@jeffKAGAN.com.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
FB Facebook Inc. 117.31 -0.12 -0.10 19,062,208
WMT Wal-Mart Stores Inc. 70.36 0.42 0.60 7,731,014
AAPL Apple Inc. 109.95 0.84 0.77 26,089,700
S Sprint Corporation 8.17 0.12 1.49 53,090,389
TWX Time Warner Inc. New 93.90 0.56 0.60 5,839,253
TMUS T-Mobile US Inc. 55.99 0.97 1.76 7,560,354
AMZN Amazon.com Inc. 764.72 5.36 0.71 3,789,491
VZ Verizon Communications Inc. 50.36 0.61 1.23 13,522,207
GOOG Alphabet Inc. 759.11 -3.41 -0.45 1,633,392
WEN Wendys International Inc. 12.99 0.14 1.09 4,059,535
T AT&T Inc. 39.35 0.72 1.86 23,550,068
CMCSA Comcast Corporation Class A Common Stock 68.70 0.02 0.03 10,659,038

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