Google Nexus One Reveals Retail Ambitions

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Google Nexus One Smartphone

Google's Nexus One is a nice phone. It's fast, attractive, and can run some great software. The Android Market may currently offer less than a fifth as many apps as Apple's iTunes Store and the phone itself my lack the multitouch support that makes iPhone interaction so intuitive, but Nexus One users have access to Google Voice, Google Goggles, and system-wide speech input. The iPhone's lead is diminishing.

Still, phones come and go. Three months from now there will be an even more impressive Android model and in June or July, expect Apple to strike back with a more advanced iPhone.

Consider the Nexus One to be developer bait. At the Nexus One press conference at Google's Mountain View headquarters on Tuesday, Google speakers made it clear that developers don't have to weather an Apple-style approval process when trying to get their apps into the Android Market.

Faced with real competition, Apple has been working to improve its approval process, but it remains to be seen whether more relaxed rules will discourage developers from expanding their horizons to include Android devices.

Within one to two years, app count won't be a meaningful point of differentiation between Android devices and the iPhone.

The real significance of the launch of the Nexus One what it says about Google's commitment to online retailing and the company's apparent aim to broaden its competition with Amazon.

A report issued on Wednesday by research firm Datamonitor says that if Google's online store turns out to be a success, Amazon has reason to be worried. It argues that Google's ambition is to become the first managed device platform vendor.

"The importance of the Nexus One is not in the hardware or pricing, but in Google's control of the complete end-to-end user experience of the handset, from procurement to the delivery of Web services to the device," the report says.

In fact, Amazon, with its Kindle, already is a managed device platform vendor. And reports suggest that Apple soon will be too, with its widely anticipated tablet, if you don't already count the iPhone as a device that's at least partially managed.

Gartner VP Ken Dulaney says that in the short term, Google's online store and its relationship with HTC is simply a fulfillment deal.

"It's a third party that's fulfilling the unlocked phones," he said. "This is an HTC phone with Google content. It's exactly the same deal as the Droid. It's not a Google phone."

At the same time, Google's arrangement with HTC could change the dynamics of the contract manufacturing. Dulaney anticipates a bifurcation of the phone manufacturing market into high-end smart phones and everything else. For HTC, its partnership with Google represents another step on the road away from commodity manufacturing toward being a premium brand in its own right.

Longer term, Dulaney says Google could be extending its competition with Amazon beyond cloud computing services.

It would not be surprising to see Chrome OS devices in Google's online store around the end of this year or in early 2011. Also, Google will soon begin selling Google Editions e-books online and through through brick-and-mortar retail partners. Clearly, Google is moving beyond selling ads toward selling digital and physical content.

In addition, Google is laying the groundwork for the time when it can deliver digital content over "white spaces," the unused portion of the broadcast spectrum, which presumably will be less expensive than paying to use a mobile operator's wireless spectrum.

In a blog post on Monday, Google published a proposal to build a white spaces database that is publicly accessible and searchable, an FCC precondition for white space use. The purpose of the database is to provide public information about the frequencies that can and cannot be used in a given location.

"When the FCC voted to open the white spaces to unlicensed use in November 2008, it required that such a database be deployed before consumer electronics companies could start selling PCs, smartphones, e-book readers or other devices that used this spectrum," explained Google's telecom and media counsel Richard Whitt in a blog post.

It's a generous offer that just happens to align with Google's business interests.

For Further Reading:

Google Reveals Nexus One 'Super Phone'

Google Unveils Android's Future, Announces Nexus One

iSlate, Nexus One Kill Microsoft's 15 Minutes