After all the noise ahead of the launch, what should we make of the new Nexus One? (This was our live coverage of the event, with comments from readers). A few thoughts:
It’s not “the first Google Phone“. I know, you’ve read stories elsewhere saying it is, but trust us on this one: it really isn’t.
I quizzed Andy Rubin, head of Google’s Android team, on this: he insisted that Google had no more (or less) input on HTC’s Nexus One than it had on Motorola’s recent Droid. This handset does not break new ground – just because the Google brand name is bigger doesn’t make it a Google Phone.
That said, it’s interesting that Google has been getting steadily more involved in shaping the user experience on Android handsets. When I talked to HTC CEO Peter Chou about this, he said Google had almost no hand in the first HTC Android handset: compared to that, it worked very closely on the Nexus and was instrumental in shaping the ultimate experience.
The real story is in the distribution. As we wrote yesterday, the new phone is really intended to draw traffic to a new online Google phone store. It will be tested first in the US, UK, Hong Kong and Singapore, but eventually extend to many more countries and cover multiple handsets and service plans from many different operators.
Why, though, is Google getting into retail? One answer is that it isn’t: it won’t hold merchandise, that will be left to HTC. Its online store is really a showcase for handset makers and operators, and a place to fulfill purchases – Google won’t take any inventory risk.
Another answer is that it senses a chance to nudge more phone purchases online, and can use this both to extend the reach of Android faster while at the same time neutralising one of Apple’s key differentiators – the real-world Apple stores. Google may or may not be right about people’s willingness to buy phones without touching them first (the Nexus One is only available online) but it doesn’t seem a big risk to take, and it could be one way to outflank the iPhone – or at least give Apple something else to worry about.
One further advantage of bringing people to a Google store: integrating a phone purchase with Google Checkout will give Google a credit card number and a relationship with a phone customer – useful things for the future as it tries to build a market around its online application store.
The rest of the mobile industry seems prepared to play Google’s game - for now. If Google takes more control of the user experience then it will reduce the chance for handset makers to differentiate their products – indeed, it was revealing to see the CEOs of HTC and Motorola sitting side-by-side at Google HQ today, promising to copy each others’ Android innovations as fast as they are able.
Also, if an online store succeeds then it will take control of distribution away from the mobile operators.
So why would they do it? One answer is money. Mr Rubin said Google really isn’t in the business to make a margin on handset sales, so we can assume that HTC is getting a very nice price for the Nexus. Also, while there were no details, it’s a fair bet that operators are getting a good deal as well, even if that doesn’t extend to Google using its cash hoard to pay the operator subsidy itself.
There is an even more compelling reason to join Google’s game: countering the iPhone is an overriding priority for much of the mobile world right now. Vodafone needs an answer to the iPhone in Europe, and the buzz around Nexus suggests this is the closest thing yet. Microsoft’s execution in mobile software has been floundering, and Google (whose strategy looks very similar) is the best alternative to Apple right now.
Google still has a way to go as a consumer goods company. Who came up with the appalling Nexus One name? That’s something only a Google engineer could love.
