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The Googlephone - there's more where that came from

Nexus indeed

Google

The Googlephone exists. The Mountain View Chocolate Factory is already selling the endlessly-rumored Nexus One from its very own online store, pulling in sales dollars and, yes, competing with existing partners. Namely Motorola and Verizon.

Mountain View is now a retailer, and though the company says it didn't design the Nexus One - and that its new online store is all about expanding consumer choice - there's no doubt Google has also expanded its influence over the market for Android-based handsets, wresting additional control from hardware manufacturers and wireless providers alike.

Google isn't just selling its own phone - and selling it unlocked. Its market power has grown to the point where it can convince Verizon and Motorola to actually back the undertaking - whether they like it or not. According to sources speaking with GigaOm, Verizon and Motorola are "particularly miffed" at the advent of the Googlephone, after spending $100m to promote their Android-based Droid handset. But they'll be joining Google's new store sometime this spring.

Google has indeed expanded consumer choice, and that suits its advertising-happy business model quite nicely. Yes, the company expects to make money selling the Nexus One, a device manufactured by Taiwanese hardware maker HTC. But as Android project lead Andy Rubin said during Tuesday morning's Nexus One press conference, the ultimate aim is to sell more ads. If Google can get its own unlocked phones into the hands of consumers while continuing to maintain a certain amount of control over the software running devices sold by others, it's just where it wants to be.

"We're trying to make sure that a lot of people have great access to Google services. The software on [the Nexus One] is the best Google experience," Rubin said. "If you want the best possible Google experience, you'll come to the store, grab the device, and [the Google] advertising model takes off."

As late as October, Rubin denied the existence of the Googlephone. But now that the phone has arrived, he denies that denial, continuing to push the idea that Google is merely enabling its partners.

"If you go back and look, I was very precise. I said Google would not build hardware," he said, alluding to its relationship with HTC. "It's a partnership-based business. We partnered with the guys that have joined us today to build great technology."

Though Rubin insisted it's wrong to say that Google designed the Nexus One - telling GigaOm "there are no hardware or industrial designers on my team" - he does say that Google now has more influence over the devices itself. According to the Wall Street Journal, Mountain View designed "virtually the entire software experience behind the phone, from the applications that run on it to the look and feel of each screen." And according to vice president of product management Mario Queiroz, the Nexus One marks a significant change in Google's role with Android devices.

"To help Android adapt to the needs of consumers like you and me, we apply our engineering resources here at Google... to selected projects with our partners," Queiroz said. "But we want to continue to do more. One of the questions we asked ourselves some time ago was: 'What if we worked even more closely with our partners to bring devices to market which are going to will help us showcase very, very quickly the great software technology that we're working on here at Google?' We've done just that."

According to CNet, Rubin also confronted October's rumors by scoffing at the notion that Google would "compete with its own customers" by releasing its own phone. And now it's certainly competing with its own customers. But even as it competes with Verizon and Motorola from its own etail store, it has convinced the pair to put their names behind the venture - and eventually join the store as well.

Today, Google's online phone store sells only the GSM-based Nexus One - either unlocked or in tandem with wireless service from T-Mobile USA. But in the not-too-distant future, Google says, Verizon Wireless, Vodafone (which owns half of Verizon Wireless), and Motorola will join the setup.

Rubin says such companies are willing to join Google's online store for the sake of "efficiencies." The online direct model, he explains in Michael Dell-like fashion, cuts out overhead. "[Wireless operators] just want to sell service plans," he said. "This [web store] enables them to reach consumers very efficiently."

Well, except for the fact that this online store is run by Google and its first product is a phone that offers - in the words of Google - the "best Google experience" of any phone on the market.

On one level, it makes sense. Once Google decides to open its own phone store and offers you a place in it, you might as well take it. Selling your device alongside the Googlephone is better than not. But you have to wonder when and how Motorola and Verizon learned of the Nexus One - and whether some additional leverage was needed to bring them in line with the idea.

Clearly, Verizon and Motorola were brought into the process after HTC and T-Mobile. They aren't part of the store yet. And during Tuesday's press conference, you got the distinct impression the pair didn't ink their Googlestore deals until late in the game. Whenever the deals were stuck, we wouldn't be surprised if Google wooed the pair with a cut of its ad dollars.

Google declined to provide us with details on the partnerships. And it won't say when those deals were inked.

At the tail-end of today's press conference in Mountain View - broadcast via the web - Google even trotted out Motorola co-chief exec Sanjay Jha to prove that the two companies are still on speaking terms. He arrived late for the question and answer session - which began an hour into the press conference - after Google said he was stuck in traffic.

Though Google says it will eventually sell a version of Nexus One for Verizon's network as well as GSM-based networks, Jha says the device is no threat to the Android-based devices on T-Mobile and Verizon, including the recently announced Droid. "I think the Nexus One is a good phone. I think the Droid is a good phone. I think we will upgrade the Droid with the software that runs on the Nexus One. Clearly, both Peter and I compete in the marketplace to deliver the best products we can," he said, nodding toward HTC CEO Peter Chou, who sat beside him.

"I see this as another way to get to consumers, another way for them to buy devices. I don't see this as a threat [to Motorola]. I just see it as potentially an expansion of the marketplace."

It is an expansion of the marketplace. But that expansion favors Google more than anyone else. Google's aim all along was to remove the carriers' vice grip on the wireless market, and one small step at a time, it's working toward that end game. Motorola and Verizon may be miffed, but at this point, they have no choice but to play along. Google is already in talks with other hardware manufacturers and carriers about joining its new store.

During Tuesday's press conference, after Google unveiled what is hardly an earth-shattering phone, one reporter asked where the revolution was. Where was the Gizmo5 VoiP? Where was the Google Voice? Where was the iPhone killer? But clearly, Google is aiming for much more than just a nifty handheld. It wants an army of nifty handhelds, from countless manufacturers, running on countless wireless networks - and it wants all of them running ad-happy Google apps.

Yes, the Nexus One name is a Philip K. Dick reference. But it should also tell you something about Google's plans for the future. ®

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