Launched in 2015, Google's Project Fi has always had some clever ideas to address common customer pain points in the wireless industry. The Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) subsidiary created a sort of hybrid mobile virtual network operator (MVNO) by combining coverage from multiple cellular networks, supplemented by Wi-Fi. Supported phones would dynamically switch to whichever network had the strongest signal.
Initially, Project Fi would even generously and automatically refund back money for unused data, a stark contrast from traditional carriers that view selling unused data as a profit center. This model was changed earlier this year when Google introduced Bill Protection, a simpler model for offering unlimited data that saves customers money in billing cycles where they use little data.
Project Fi's biggest historical weakness has been a dearth of supported devices, although the MVNO has been slowly making progress on that front.
Rebranding as Google Fi
Google announced today that it is dropping the "Project" and renaming the service Google Fi while adding support for many more devices. Most notably, Google Fi will now support Apple's (NASDAQ:AAPL) iPhone (5S, 6, SE or newer), although there are some strings attached. The "majority of Android devices" are now supported, even if they weren't specifically designed for Fi.
Therein lies the rub. Phones that aren't designed for Fi do not support the intelligent network switching, a feature that requires specialized hardware and software. That includes iPhones, which Google says is in beta currently. There are some other small quirks, like no support for visual voicemail in iOS and users will need to adjust settings to send text messages to non-iOS devices. (iMessage works normally.)
In other words, the expanded support for a greater array of devices isn't all that meaningful since those devices don't support many of Fi's most innovative features. Lacking many of the technical benefits, switching to Fi for those users comes down to the flexible billing features that Google offers.
Fi still feels like just a project
While adding support for more devices, including the all-important iPhone, is a step in the right direction, it's still unlikely that Fi will make a meaningful impact on the wireless industry. Google has never disclosed how many Fi subscribers it has, and the service only really appeals to owners of six phones, none of which are particularly high-volume handsets. Many consumers these days are also on family plans, which dramatically raises the switching cost and inconvenience of moving everyone to another carrier.
The silver lining here is that unlike Google Fiber, the search giant's other effort to provide connectivity, Fi uses a capital-light model. Whereas Google Fiber required massive capital expenditures to lay down all that fiber, the company purchases wholesale capacity for Fi from the national carriers. That gives Fi more flexibility and reduces financial pressure. Google wants to take Fi more seriously, but it still has work to do before it can be a viable alternative for most people.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.