Zacks Investment Research Take On Google's (GOOG) Android Security Issues

Mar 07, 2011, 15:00 ET from Zacks Investment Research, Inc.

CHICAGO, March 7, 2011 /PRNewswire/ -- Rich Cannings, the security lead for Google Inc's (GOOG) popular Android OS, wrote in a blog post that the company is remotely removing malicious apps from infected phones. Google (GOOG) is doing this through the "kill-switch" that already exists on all Android phones.

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The malicious code, which reads users' personal information, has been discovered on 58 apps and more than 260,000 phones (lower than Android 2.2.2 version) have been affected.

Google (GOOG) has already removed the apps from its marketplace and intends to email users of the affected phones, as well as the ones that have already been cleaned. However, considering the uncomfortable feeling that users might get as a result, it may not go through with this in the end.

While Google's (GOOG) proactive security measures will be encouraging for some users, most are likely to view the sacrifice of their privacy negatively. Whether it is the hackers or Google, the fact that other people have control over their devices is not likely to go down too well.

App writers are also not likely to take it in stride. The fact that Google (GOOG) does not have good enough app-vetting machinery like Apple Inc (AAPL) will no doubt be on their minds. Google (GOOG) has promised an arrangement with unnamed partners (mobile operators or hardware providers, we are unable to determine) that would improve the future security of Android devices.

Google (GOOG) will also introduce the Android Market Security Tool March 2011 that can remove the malicious code and scan new apps for malware. Hackers will no doubt work their way around it, so we look forward to further details on the arrangement with "partners."

The question of mobile security brings to mind Intel Corp's (INTC) recent acquisition of McAfee and the thought that a secure chip may soon be available is encouraging. Intel has stated that a number of phones and tablets incorporating the new technology will ship in the second half of 2010.

The only other mobile phone OS (other than Android and iOS) of the same genre is Microsoft Corp's (MSFT) Windows Phone 7 OS. Microsoft still commands a relatively small share of the global mobile phone market, although its agreement with Nokia Corp (NOK) could change things. Microsoft has bundled some security software with its computing OS, so future versions of its Windows Phone 7 OS could do likewise.

We have a Zacks #3 Rank (short-term Hold rating) on Google (GOOG), Intel and Microsoft shares, a Zacks #4 Rank (short-term Sell rating) on Nokia shares and a Zacks #2 Rank on Apple shares (short-term Buy rating).

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