But gPhones have come a long way in a much shorter time than iPhone has :-)
I told the same friend, that as soon as I bet as soon as I buy an iPhone, Google would come back with a better phone with more relevant applications. Shortly afterwards HTC did just that, and Google started giving away free turn by turn GPS application (for driving). Ouuuuch!
I am not sure what Google's long term plan for gPhone and their mobile division is, but they understand the importance of the third screen, and its future potential. I trust that they do have a long term plan. Maybe google wants to be an alternative to carriers in the long run -- an exteremely lucrative but risky plan. More than likely, they may want to dominate the hand set market, in the more open and sophfisticated overseas market (T-Mobile should help). This is obviously a large market, I am just not sure how lucrative it is. May be there is a synergistic plan with their other products -- not just advertising, but their netbook plans and chrome.
But when it comes to iPhone, Apple has been a master of Design/Style and User Interface, which google needs to address. Specially because the major buyers of phones are younger, Hip, stylish and want ease of use. Google is also a great engineering company and that is their core strength. I was blown away when I saw a cell phone (I think it was panasonic) that came with a projector :-) A great potential solution to the small screen -- we just need a solution to keyboard :-) Google also has great smart with what matters with customers. Giving away the most popular applications for free (like the GPS) was brilliant. Google should get more developers online -- and not just for the the silly applications.
Apple seems to do a better job of marketing iPhone. Google's alliances with Music producers was a classic, but hardly anybody knows, and selling the same music and videos cheaper and getting the message out, should help. Google has to bring the right market segment onboard, through the right advertising, the right applications -- which involves developers -- and the right incentives.
For now, it seems there is a bit of chaos is going on with expensive gPhones not working and having problems.
Caveate -- this is super competitive and dynamic area. Obviously, not an area that I specialized in, or had time to consider deeply. But there are obvious short and medium term tactical things that Google needs to answer, to increase its market share in -- and then long term plans and strategies (such as M&A s, vertical integrations, etc) that Google needs to address for different geographies.
