Nexus One

Google and the Nexus One.

If you have been paying attention to technology news this week, you undoubtedly heard by now that Google is releasing its own cell phone next month called the Nexus One.  So why is everyone so hyped up about this and what does it mean for you?

The evidence began to mount starting over the weekend to the fact the long rumored “Google Phone” was finally real and will be launching early next year.  And the phone will be based on the new HTC Passion that is due out on T-Mobile next month. The big differentiator here is what’s under the hood, and that will make this a totally different phone, as well as how Google is going to sell it.

The Nexus One will be running Google’s Android operating system, which is nothing new since a number of smart phones are running it now. What will be different is that Android won’t be broken by carrier tweaks to the OS.  As Android has rolled out to the various carriers, they’ve all gone in and made little tweaks to it. Tweaks that have caused it to behave differently on different mobile handsets, and on different carriers. This in turn has made it hard for application developers to make sure their products work across all the different versions of Android running on all the different carrier networks.  The copy of Android that will run the Nexus One will probably be the truest version of the Android OS we’ve seen to date.

Rumors are suggesting the device would be launched by Google in early January, but there’s also some speculation that the Nexus One could just be a test device for trying out the latest version of the Android platform. In addition it’s  also possible that Google could be developing the hardware and software, but won’t produce or brand the device. Instead, the company might decide to license its design out to other manufacturers, in a very Microsoft-like move.

If Google does actually produce the phone, the way it is being sold is where things will get good.  All the rumors currently point to Google selling it themselves via the internet as an “unlocked phone”.  This means that the phone is not tied to any one carrier, so you can buy the phone from Google, walk in to any GSM network carrier, sign up for their service, get a SIM card from them, put it in your phone and it will work.  Right now almost all phones have a carrier logo on them, because the phone is subsidized by the who ever you have service through. It’s why you get your phone for next to nothing, and it’s why you can’t take a BlackBerry you buy from Sprint and expect it to work on the T-Mobile network and vice versa.

While many companies such as Nokia, Motorola, and Samsung have been selling unlocked versions of their phones for years, none of them have had the name “Google” and “Android” attached to them which is going to make this a highly desirable device.

One problem consumers may encounter is going to be in the price.  If you have ever tried to buy a cell phone that isn’t attached to a contract, or a phone that is unlocked and unsubsidized, then you know that those phones cost more in the range of $300 – $600 depending on the phone.  So, unless Google finds a way to subsidize this phone, most people won’t be running out to buy it.

One rumor floating around right now is that Google will sell the phone at a lower price, or as a loss leader,  and will make up the loss through advertising on the phone.  It’s the same way they bring you services like Gmail for free, so the company is well versed in the online advertising revenue business model.  Will it be enough to make the phone affordable though, and will it be the kind of user experience that customers are willing to put up with?  Only time will tell. The real thing to look for is how long will it take people to break down and say “how much do  I have to pay you to not see the ads anymore?” Look at all those “Free”, or “Light” versions of iPhone apps that end up getting upgraded just to lose the advertising.

Quite possibly the Nexus One could end up being a game changer for the cell phone industry in more way than Apple’s iPhone.  You have a highly desirable phone that is not tied to any one carrier. This is the kind of thing that will force cell phone carriers to compete for your business and that is a good thing. When the iPhone was first announced, the rumor was that it was going to be an unlocked phone. How many more units would Apple have moved if you could have used it on any GSM network in the world? How much less might you be paying for your cell phone service, if the carriers were forced to honestly compete in pricing structures in order to get you to sign with them.  If the Nexus One is truly sold as an unlocked phone from Google, I could easily see the carriers running “Nexus Pricing Deals” where they try to undercut each other in pricing in order to woo the most Nexus users to their network.

Firm details confirming that Google would launch the Nexus One/Google phone on its own are still pretty scarce, and there are also a lot of arguments against Google coming up with its own device. The primary argument being that if Google produces its own device, they would scare off or upset Google’s Android adopters like as Motorola and HTC. None the less, a Google-developed and sold phone could be a very interesting addition to the continuing smartphone battle.