Google has decided to enter the mobile market. It has deals with Sprint and T-Mobile to operate as a mobile virtual network operator (MVNO), where they will rent the lines from these two carriers. As per the WSJ, there are no details on plans, coverage and other such details.
This is not the first time that Google has ventured beyond its traditional online offerings. A few years ago it began to offer super fast fiber internet and TV services to Kansas as well as other US cities. The move, like this one, attracted much attention because it was seen as something to alter the competitive landscape. However, moves like this shows that there is more to Google than a bunch of engineers who are just interested in building things like this:
Although some may dismiss this as a toy, it is actually an "exponential technology" that will shift fundamentally how society will function. But I digress and that is the subject of a different post.
Hearkening back to business strategy class and the infamous Porter 5 forces model, Google is cutting out a key area of risk: the last mile to the customer. By inserting itself as the mobile operator it ensures that it can deliver its services (e.g. Search, Gmail, Google Docs, etc.) and content (e.g. YouTube) straight to the customer without any interference from the Internet provider.Google could use a strategy like some Canadian cable TV providers, where they offer a streaming video service (E.g. Shomi) that does not count against the bandwidth.
But perhaps the hidden strategic objective is a big data play: what could Google do with the new data feeds? Sure they already get from being able to correlate the information it already gets from their Android devices. However, they will now be able to analyze this data with the additional data that moves through their MVNO network, such as demographic information and location data. What good is this to Google? In a word: advertising. Advertising is still the biggest source of Google's revenue and adding this pool of data to their reservoir can only add to the bottom line.