Yahoo Finance Google analyst: wireless industry needs to get act together
Google (GOOG) wants to make more money by lowering your wireless bill; that’s what tech analyst Gene Munster says.
Munster covers Google stock as the managing director and senior research analyst at Piper Jaffray, and believes Google’s Project Fi is an effort for the internet giant to "motivate other wireless providers to provide cheap wireless service that will basically make it easier for us to consume more data."
Google is attempting to disrupt the telecom industry even further by launching its new wireless service. But "at the end of the day, Google does not want to be a wireless carrier," said Munster.
Instead, his take is the internet giant wants to put pressure on the telecom industry because low cost data generates more internet usage, which would turn into more ad sales for Google, especially with mobile YouTube.
Google is partnering with Sprint (S) and T-Mobile (TMUS) to provide mobile phone network in the U.S. The two wireless network operators will rent Google voice and data capacity, as well as the use of existing wi-fi hotspots.
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Project Fi’s major downside is that it's only available on the Nexus 6 and Google says it has no plans to branch out to other devices. Munster doesn’t see the limited scope as a problem, "what it does is act as a catalyst for big carriers to get their act together to provide more access for consumers."
Though the company is calling it nothing more than a small scale experiment, this wouldn’t be the first time Google disrupted the wireless space. The company took broadband by storm, even pushing giants like Comcast (CMCSA) and AT&T (T) out of some markets by offering faster Internet service in a handful of American cities.
The reason Munster thinks Sprint and T-Mobile are partnering with Google on this latest venture is that they’re thinking "if you can’t beat them join them." Meanwhile, Google’s whole strategy is "to promote other players to provide better, faster, cheaper service."
Piper Jaffray currently has an Overweight rating for Google with a price target set at $630 a share.
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