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Google Enters the Ring as a Heavyweight


Rumors of its handset ventures should worry other fighters.

Back in the early 1990s, a company called Lotus Development dominated the spreadsheet business; WordPerfect (CREL) was the preferred word processing program; Harvard Graphics was the de facto standard for graphics products; and dBase II was the hands-down leader of the PC-based database world. They all ran on DOS, the predominant PC operating system of the period. Then their "partner," Microsoft (MSFT), decided to become a competitor.

The rest, as they say, is history.

The Dells (DELL) and Motorolas (MOT) of the world may want to remember that history as rumors swirl about the early 2010 entry of Google (GOOG) into the handset arena.

If those rumors are correct, showing the product at the Consumer Electronics Show in Las Vegas would seem logical.

Having lured a number of handset manufactures onto its Android platform with the promise of an open and license-free architecture, Google is springing the trap now that it has built sufficient momentum behind Android. To suggest that Google won't know and take advantage of Android's plans and directions in advance is folly.

Competing with your "partners" is nothing new. But Google obviously deems the smartphone platform so significant to its future that its development can't be left to "partners."

Maybe it's the massive flood of applications developed for the iPhone that has raised concerns and forced its hand. Whatever the trigger, if the reports are correct, it's also a formal statement that Google can't be trusted.

In a market where carriers subsidize handsets offset by multi-year contracts, expect Google to absorb those same subsidies. That makes them a lot more carrier friendly than a Droid or an I7500.

Such a move pits Google and Apple (AAPL) head-to-head with the rest playing mere bit parts. Let the games begin! In the end I know that there will be one winner -- consumers.
No positions in stocks mentioned.
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