Oct. 31 (Bloomberg) — Google Inc. is in talks with Verizon Communications Inc. and Sprint Nextel Corp. about developing mobile-phone software and services, two people familiar with the discussions said.
Google, owner of the world’s most-popular Internet search engine, may build a phone operating system or applications, said the people, who wanted anonymity because the talks are private.
“It portends a pretty interesting combo,” said Mike McGuire, an analyst at Stamford, Connecticut-based research firm Gartner Inc.
Google shares passed $700 today on speculation the company would extend its dominance of Internet advertising into wireless devices. For Verizon and Sprint, ranked second and third in U.S. mobile-phone customers, new programs may help bolster revenue from data services. Google’s help would also give them an edge against larger rival AT&T Inc., the exclusive U.S. service provider for Apple Inc.’s iPhone.
Verizon Wireless spokesman Jim Gerace confirmed the companies have talked, declining to comment further. Sprint spokesman James Fisher and Google spokeswoman Erin Fors both refused to comment. The Wall Street Journal reported the talks yesterday, saying Google would make an announcement in two weeks.
Record High
Google, based in Mountain View, California, climbed $12.23 to $707 at 4 p.m. in Nasdaq Stock Market trading. The shares have risen 54 percent this year.
New York-based Verizon, which co-owns Verizon Wireless with Vodafone Group Plc, rose 71 cents to $46.07 on the New York Stock Exchange. Sprint, based in Reston, Virginia, climbed 6 cents to $17.10.
An operating system would give Google another way to profit from sales of mobile phones, which outsold personal computers by more than 4-to-1 last year, according to Gartner.
Google said in July that it may bid at least $4.6 billion to buy wireless airwaves at a U.S. federal auction. The company might work with smaller service providers to create its own network. Verizon Wireless also has said it plans to bid in the auction.
Google has developed versions of its maps, calendar and messaging software for wireless devices. Last month, it adapted its AdSense software for mobile Web pages, letting marketers show ads relevant to the sites’ content. In January, Google began offering search services on mobile phones from China Mobile Ltd., the world’s biggest wireless carrier by users.
New Customers
Chief Executive Officer Eric Schmidt noted the importance of the mobile-phone market at a press briefing in May, before Google’s annual shareholders’ meeting.
“Many people in the next five to 10 years — their first experience in the Internet will be through a mobile phone,” Schmidt said.
About 1 billion Web-enabled phones will be sold by 2011, according to IDC, a research firm in Framingham, Massachusetts.
Verizon and Sprint are counting on revenue from data services, such as text messaging and song downloads, to offset slowing revenue from phone calls.
Verizon Wireless subscribers spent $10.59 a month, or 20 percent of their bills, on data services in the third quarter. That was an increase of 43 percent from the same period last year.
A Google phone may give Verizon and Sprint a competitor to the iPhone, which combines a Web-surfing phone with Apple’s iPod music player. AT&T, the largest U.S. wireless service provider, began offering the iPhone June 29.
AT&T spokesman Fletcher Cook didn’t return a call seeking comment for this story.
Verizon added 1.7 million subscribers to long-term contracts in the third quarter, compared with AT&T’s 1.2 million. Sprint lost 337,000 monthly subscribers in the period.
Sprint and Google announced an agreement in July to offer search and mapping services to Sprint customers on a new high- speed wireless network. Google will pay Sprint under the terms of that deal.
