Google unveils Nexus One smart phone
In an ambitious bid to expand its reach even to consumers on the go, Google Inc. on Tuesday unveiled the widely anticipated Nexus One smart phone as it launched a bold new business model that could shake up the mobile phone industry.
The Internet giant began selling the phone -- manufactured to its specifications by a Taiwanese firm -- directly to consumers through its website rather than through retail outlets and service providers. Although initially available only with T-Mobile service, the phone could eventually be used on other networks, including Verizon Wireless and Vodafone Group in Europe.
The launch of the new phone, Google’s first venture in selling a consumer electronics device, marked a major salvo against Apple Inc.'s hugely popular iPhone and Research in Motion’s BlackBerry.
Yet, despite all the hoopla fueled by rumors and speculation in recent weeks, the debut of the Nexus One did not seem to have consumers salivating the way the iconic iPhone did. The Nexus One has attractive features, but many of them were already available on other phones that use Google’s Android operating system.
“This isn’t the ‘Oh my God, revolutionary, mind-blowing thing we have never seen before,’ ” influential technology blogger Robert Scoble said. “What this is is another piece” of the strategy.
Google is shrewdly rolling out a line of attack that could ultimately hand the Mountain View, Calif., company a commanding stake in the mobile market, analysts said.
The company that started as an Internet search engine is looking to rule the touch screen the way it dominates the desktop. And for good reason. The future of online advertising, which drives Google’s profits, could rest with mobile phones.
“This is the next front of our core business,” said Andy Rubin, Google’s vice president of engineering.
The company is broadening its appeal to consumers with a swarm of phones in partnership with manufacturers and carriers. Rather than just allowing manufacturers to design phones that use Android, it is playing a key role in designing its own Google-branded phones and encouraging major wireless carriers to compete to sell service contracts.
Nexus One, for instance, is being made by Taiwan’s HTC Corp. based on Google’s specifications. The device costs $529 without a service contract and starts at $179 with a contract with T-Mobile USA.
Technology research firm Gartner Inc. predicts that by 2012 phones with Android operating systems will surge to 14.5% of the global smart phone market, behind Symbian systems, which are used in Nokia devices, but ahead of the iPhone and BlackBerry.
“You can see the momentum that Google has,” Gartner analyst Ken Dulaney said.
Google built itself into a multibillion-dollar juggernaut through the sale of small text ads linked to queries typed into its ubiquitous search engine.
The company is now attempting to woo consumers who are increasingly turning to powerful mobile phones to surf the Web, send e-mail, get directions or bond with Facebook friends. But Google needs to have the smart phones that can more smoothly run its growing number of online consumer products and services.
Google has taken numerous steps to make that possible. It has invested in a number of mobile-related companies, most recently AdMob, which specializes in mobile advertising. That deal, which has fired up critics who fear it will give Google too great an advantage in mobile advertising, is awaiting approval from regulators.
The company also has built a suite of products that are based on a user’s location to take advantage of mobile phones with GPS capacity. Last month Google nearly bought Yelp, which has a faithful following for its local business listings and reviews.
Whether these investments will pay off remains to be seen. Mobile advertising is still in its infancy. But Google executives are betting that as consumers migrate to ever more powerful phones, the advertising dollars will follow. Designing and selling its own phone was a crucial step to ensure that, Rubin said.
“Before you can revolutionize the world . . . you have to have a mechanism by which you are selling the product,” Rubin said. “The first baby step is to get an online store going and put best-in-class products in that store.”