Friday, April 24, 2015

Google's Project Fi: The “Why” and the “What’s Next”

Certainly most folks who follow tech are plenty aware of Google’s new Project Fi, a new multi-carrier virtual network operator (MVNO) that combines signal from T-Mobile, Sprint and WiFi networks with Google Voice-like multi-device dialing to create a very affordable and powerful mobile phone experience. But, what’s this really all about, and what is really starting to happen? Here are a few interlocking pieces to consider.

First and foremost, Google needs more revenues - they revealed pretty good performance in their last earnings report, but nothing dazzling. Google is doing great, but getting hammered in two key areas where they are plateauing: mobile ad revenues and mobile device market share. Read on for some intriguing connecting of the dots from all of the information available today.

More Web Use, More Google Bucks

Yes, Android has rebounded as always from the usual holiday Apple sales bump, and yes, Google’s doing a lot better in its mobile strategy in general. Certainly the recent “mobilegeddon” changes to their search prioritisation algorithms are a clear sign that they’re committed to making the Web produce revenues for them on mobile platforms more effectively. But the big picture is that the mobile carriers and phone makers have done a wonderful job of balkanizing the mobile experience that it’s very hard at times for Google to make the mobile Web work well enough to generate them more revenues fast enough to replace income from more profitable Web ads seen through desktop and laptop browsers.

Getting More Mobile Web for Less Means More Ad Revenues

So, Project Fi. There have been MVNOs deployed before with a similar general design, but Project Fi is the first to combine a global marketing plan with top-rated mobile devices and pricing plans that can scale to finally put pressure on the business models of carriers, U.S. carriers in particular. U.S. carriers are experts at overcharging people for both heavy data use and low data use, using this pricing to put as little pressure on them as possible to upgrade the performance of their networks (see good analysis of this at: http://goo.gl/oo5q7O). Project Fi provides a model that will reward that networks that enable the most data use cost effectively - without forcing consumers to switch carriers to find that “sweet spot.”

WiFi Comes of Age

Using WiFi is a key link in this strategy, as many people are often within range of usable WiFi at home or in town. In addition to our home WiFi networks and networks in offices, stores and restaurants, cable companies and telephone companies have been deploying WiFi networks for their customers aggressively also. Most of that capacity is vastly underutilized, since drive-by signals are hard for older phones to switch to seamlessly. If you start a phone call on your mobile phone via a WiFi service and then start driving away, for most typical phones you’re hosed. The MVNO concept, combined with the latest and greatest mobile phone hardware and software, all of a sudden makes those underused public and cableco wifi hotspots usable in little driveby chunks, lowering your mobile data bill byte by byte. So the apparent costs of the Project Fi service plan are actually likely to be far lower than you think.

But You Need the Right Phones...

All this is great, but if Project Fi gives a cruddy experience, people aren’t going to love it, right? Hence, Fi is launching with one single phone for starters - Google’s Nexus 6 flagship “pure” Android phone. Nexus phones have always featured carrier-independent models in the U.S., and, so it’s the logical choice to get Project Fi off the ground - no hidden clauses in carrier contracts for other phones that would trip up its use in Google’s own network, and software that’s completely in Google’s control. If a carrier sells a Nexus phone, they know that they’re competing with Google’s carrier-independent strategy. Hence, the carriers may sell them, but not push them, typically. However, T-Mobile and Sprint have been far more Nexus-friendly than Verizon and AT&T in their support of Nexus devices, so they are logical partners for these unencumbered phones. They’re also companies that are in the number 3-4 slots in market share, so Nexus has been at least a plus for them as a niche product.

...And the Right Modems...

But Google's +Nexus 6 is Project Fi’s leadoff phone offering for another important reason: it’s modem chip. If you’re on T-Mobile networks in particular, you need modem chips that can support the latest and greatest radio frequencies that are being used for their advanced LTE networks rolling out this year. The only carrier-independent phone in the Android universe that does this perfectly well at the cutting edge of U.S. network technologies is the Nexus 6, which is equipped with a Qualcomm MDM9625 modem chip. Ho hum, so what? Well, an interesting thing about the Project Fi intro video (https://www.youtube.com/watch?v=xfFHnBQ6nQg) - it’s filled with all sort of feel-good, mushy, generalizations about Project Fi, but features a shot of this Qualcomm chip that stays in focus for a few seconds. It’s the only specific piece of technology mentioned in the whole video.

Obviously this modem chip is the key to Project Fi’s rollout. It happens to be a chip that’s used in many leading phones, including the iPhone 6. Earlier Qualcomm modem chips are used in the Nexus 5 and iPhone 5, so it appears that Project Fi will grow up on the latest and greatest hardware available to maximise its U.S.-wide coverage. In this way, Project Fi is a bit like Google Fiber for mobile - it’s a market force using leading-edge technology that they will use to force carriers to give consumers more Internet coverage and bandwidth for less. Focusing on this chip means that Google wants to completely reset the table stakes for mobile Internet access.

...And More Phones...

Of course, the Nexus 6 is a big, pricey phone, which, as great as it is, has disappointed even Google in its slow sales. In this sense, Apple did a great job with its iPhone 6 launch by offering both a 5-inch and 6-inch model. Google skated through with just the 6-inch model last fall, and wound up disappointing lots of Nexus fans who wouldn’t - or couldn’t - spend that kind of large just to be a Google loyalist. It was a repositioning of the Nexus brand that was ahead of consumer expectations, you might say. The need to close this market gap sooner rather than later may combine with Project Fi’s need for a smaller and more affordable cross-network phone with the right modem chip to force the introduction of a new Nexus 5 phone sooner rather than later - and, who knows, perhaps even a “bargain” Nexus 4 model. Huawei and Motorola Mobility have both been rumored as the likely producers of this next Nexus phone, based on snippets in Project Fi support videos and leaked Web page images.

It’s hard to say which rumors are really true at this point, but the need to get a dead-certain piece of hardware out the door to support both sagging Nexus sales and more affordable devices for Project Fi argues for a mid-year intro for a new Nexus model. That would be six months ahead of their usual rollout, which would mean using a slightly upgraded or existing phone model with the right Qualcomm chip as a new Nexus phone. Given that Google is testing a Workshop phone customisation Web site for Nexus phones, and given that the 2014 Moto X sports the MDM9625 Qualcomm modem chip, and already has phone customisation via Moto Maker, I am leaning towards the camp that’s suggesting a Nexus 5 being announced (and perhaps handed out) at Google I/O 2015. However, I wouldn’t rule out Huawei entering the mix along the way with a Nexus 4-like model, which, given that they’re established as a “value” brand, would make sense. Whatever the case, it seems that Google will move quickly towards Project Fi supporting any phone with the right modem and software as soon as possible.

...And More Networks!

Finally, let’s remember that although Project Fi is very U.S. oriented, it has a global marketing plan - you can look up any postal code or municipality in the world that’s on Google Maps and get a sense of what Project Fi’s coverage will be. Even nations like Ghana are covered in Project Fi’s mapping. Why does this matter? Yes, it’s part of Project Fi’s global data roaming programme, courtesy of alliances via T-Mobile, and yes, WiFi will work globally as well, thank you very much. But let’s not forget one key factor - Google’s +Project Loon switched from Super WiFi wireless technology to LTE technology a while back, technology that’s likely to use the same radio frequencies supported by those Qualcomm modem chips. So, in places where Project Loon gets deployed, an affordable phone equipped with the right modem will get Project Fi access, probably - including poorly covered rural zones in the U.S., no doubt.

An Exciting Picture

None of this came from peeking at a whiteboard in a Google office, mind you, but it seems like the logical landscape of what Project Fi starts to bring together. It will be interesting to see how this all pieces together in the months ahead. If I get more of this right than not I am none the better for it personally, probably, but hopefully I’ll at least enjoy one “told’ja” along the line.