Google Puts Marketing Muscle Behind Nexus One Handset

In an evolutionary move away from its software based mobile phone strategy, Google has announced the launch of the Nexus One handset, a name referencing Phillip K. Dick's novel Do Androids Dream of Electric Sheep? featuring the Nexus-6 androids (and about which the author's estate is unhappy). Manufactured by long-term Android stalwart HTC, but with a greater degree of input from Google staffers to "optimise the Google experience", the real change comes in how the device is sold. Google is providing the full might of its web presence and marketing abilities to sell handsets directly to consumers—or to point to and potentially facilitate sales through carrier partners that are selling the device with the usual subsidy model (see World: 14 December 2009: Google to Push "Nexus One" Handset Direct to Consumers—Reports).

The handset is initially available in the United States priced at US$529, or US$179 on T-Mobile USA, although details of that deal are currently not shown. Vodafone has also been signed up as a carrier partner in Europe with a promised launch date of spring 2010. A CDMA version is also in the works with Verizon Wireless slated as a carrier partner for spring 2010.

As with every other flagship touch-screen handset released in recent years, it is an obvious pitch against the Apple iPhone. Google is stepping up the campaign for its Android operating system to compete with the handset that started to bring the smartphone revolution into the mainstream, just as reports have emerged that Apple is looking to tap potential adjacencies in the mobile advertising segment (see World: 5 January 2010: Apple Acquires Mobile Ad Company Quattro Wireless—Reports).

Comparing the two handsets shows some slight specification improvements with the slightly lighter and thinner Nexus boasting features such as a 5-megapixel camera with flash against the iPhone's 3-megapixel flash-less model. The 3.7" AMOLED display with 800x480 pixel resolution looks good against the iPhone's 3.5" 480x320 LCD screen. The radio in the Nexus supports both HSDPA at 7.2 Mbps and HSUPA (uploads) at 2 Mbps—the iPhone matches the download speeds but is limited to 384 Kbps. The 1 GHz snapdragon processor and 512 MB RAM should offer speedy performance benefits against the iPhone 3GS 600 MHz (under-clocked from 833 MHz) processor and 256 MB RAM, although the iPhone also sports a dedicated 200 MHz graphics processor. Where the iPhone remains ahead appears to be the multi-touch capabilities (although the Nexus One also sports a trackball) and a better battery life—at least on standby and 2G or Wi-Fi, or for video (10 hours to 7 hours) or music (30 hours to 20 hours)—although not on 3G where the Nexus quotes seven hours to the iPhone's five. The Nexus also only sports 512MB of onboard memory, although this is expandable to up to 32GB with MicroSD cards, and ships with a 4GB card.

The Nexus One will also come loaded with a range of Google applications—Gmail, Google Voice, and Google Maps Navigation—and features voice-to-text (and voicemail-to-text) and "live wallpapers", which have some degree of interactivity.

Outlook and Implications

In a nod to the fact that Google is taking some of the attention from other vendor partners, Google also points potential buyers to the recently released Motorola Droid for those who "Can't wait for (your) Verizon Nexus One?" Given that handsets slide under hard keyboard, there is a significant differentiation in hardware that could also help to mollify Motorola to some extent (see World: 29 October 2009: Motorola Announces Flagship Droid Handset). The Register reports that Motorola's head of mobile devices, Sanjay Jha, made a showing, although somewhat delayed by traffic, at the launch of the device and noted that "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 (Chou, CEO of HTC) and I compete in the marketplace to deliver the best products we can."

Nevertheless, this move by Google really drives home the dangers of handing control over operating system and ecosystem to Google as it bites a chunk out of the production and distribution value chain that belies the original purported values of the provision of a free and open source operating system, and the neutrality of the "Open Handset Alliance" that they built around that (see World: 10 December 2008: Vodafone, Sony Ericsson Join Google's Android Open Handset Alliance and World: 6 November 2007: Google Unveils "Software-Based" Mobile Phone Strategy). Given that Google has made significant investments in the operating system and the ecosystem, some form of return—from a cut in handset retail sales, applications, and advertising—is to have been expected. The question for carriers and vendors is now whether they fight against Google's attempts to muscle into the mobile ecosystem, or take the free operating system, applications, services, and—potentially most beneficially—marketing.