First there was news that old enemies were in talks. Verizon Wireless (NYSE: VZ) was working on a deal with Google (NASDAQ: GOOG) to distribute the search company's new handsets, which will run with its mobile operating systems and will have Gmail, YouTube, and the firm's Maps product. Verizon and Google have been fighting over the terms under which the FCC should auction its new wireless spectrum.
Google is unlikely to do business with both wireless companies. It would take away the competitive advantage that one of the two rivals would get in a partnership to launch the phone. According to The Wall Street Journal [subscription required], "A Google technology partnership might let the carriers offer cheaper phones, because Google's licensing fees for its software and operating system would likely be less than the industry standard." And, the phone might have the "cool" factor that AT&T (NYSE: T) has picked up with its exclusive arrangement to distribute the Apple (NASDAQ: AAPL) iPhone.
While the deal might be a way for Verizon Wireless to add an entirely new product line, its third quarter results show that it is more than holding its own against AT&T Wireless. Not so for Sprint. After its merger with NexTel, integration and customer satisfaction problems have been so bad that the company's CEO was recently forced to leave. Sprint needs an attractive product to get back in the game.
If either wireless provider picks up the Google phone, the device gets instant credibility. Verizon Wireless has more than 63 million subscribers in the US and Sprint has more than 50 million.
But products from Google, like products from Apple, have a special cache all their own. And that gives them a huge advantage when it comes to finding distribution partnerships.
Douglas A. McIntyre is a partner at 247wallst.com.