As a company that has built a business model atop trust, Google is in a sticky position as it prepares to formally introduce the Nexus One phone.
Google's Nexus One phone could be a sea change in how Google works with Android partners who might turn into competitors.
Google employees href="http://www.cnet.com/8301-19736_1-10414406-251.html">were given free Nexus One phones at a company party Friday night, and the Internet went into a tizzy. Reports surfaced later in the weekend that this device was the long-awaited Google phone, the company's answer to Apple's strategy of controlling the hardware, software, and distribution model with the
iPhone, rather than the partner-oriented strategy of developing the guts of the operating system and letting partners each put their own stamp on the finished product.
Just two months ago, Google's Andy Rubin rolled his eyes when asked about an analyst report picked up by TheStreet.com that said Google planned to pursue this exact strategy. He said Google had no plans to make its own hardware--which is one thing since smartphones are almost exclusively manufactured by contractors in China and Taiwan--but he took a further step in spending about 10 minutes arguing why it would be a bad idea for Google to design its own phone and sell it outside of carrier channels. That line of thinking resonated with many who follow Google and the mobile industry. After all, Google's stated goal for Android ever since the project was revealed in November 2007 was to create an "ecosystem" of multiple phones that would help improve access to the mobile Internet. And Google seemed to finally reach that goal this year, with over a dozen phones in the wild and more promised from some of the world's leading phone makers and wireless carriers.
But if the reports are correct, Google is about to make a radical departure from that strategy. And Google's new course would take it down a path that could sow distrust among the company's Open Handset Alliance partners, who must now be wondering if they're about to get into a marketing war with one of the tech industry's richest companies. Katie Watson, a Google representative, said on Sunday that the company has confirmed nothing about its plans for the Nexus One, described as a "dogfooding" experiment for internal testing by the company in a blog post Saturday. In the rush to anoint the Nexus One as the Google Phone, it's quite possible that the tech industry glossed over the fact that Google already sells Android phones, albeit on a limited basis.
For quite some time, registered Android developers have been able to buy completely unlocked versions of the G1 and the T-Mobile MyTouch3G (also known as the Google Ion) for $399. So there is a solid chance that the Nexus One is merely the Android Dev Phone 3, following the Dev Phone 1 (G1) and Dev Phone 2 (MyTouch or Ion).
Just this year, Google handed out Dev Phone 2 models branded as the Google Ion to attendees at Google I/O 2009, but if regular people want to buy that particular phone they have to get the MyTouch3G from T-Mobile with a two-year contract. It does seem clear that Google has played the premier role in designing the software for the Nexus One. In the company's blog post over the weekend, it said "we recently came up with the concept of a mobile lab, which is a device that combines innovative hardware from a partner with software that runs on Android to experiment with new mobile features and capabilities, and we shared this device with Google employees across the globe."
But the key unconfirmed detail is how Google plans to sell this phone. According to The Wall Street Journal, Google plans to sell this phone unsubsidized on its own, with consumers able to choose a wireless service provider after the fact. However, according to corporate sibling Peter Kafka at All Things D's MediaMemo and Reuters, Google has plans to hook up with longtime mobile partner T-Mobile to help sell the Nexus One through Google's Web site for $199. How will Google market this phone? Anyone with a television set has likely seen an ad over the last month for the Motorola Droid, an Android phone sold for Verizon's network that has been billed as one of the best Android phones to date. It was also the launch pad for a long-term pact between Google and Verizon that will supposedly produce a family of devices based on Android. If Google plans to sell the Nexus One directly to consumers, will it insist upon using its brand as the lead brand, rather than the "With Google" branding found on the back of many Android phones?
Will it blast the airwaves during the NFL playoffs in January to trumpet the arrival of the Nexus One, perhaps just in time for the Super Bowl? And how will that affect partners such as Motorola and Verizon that have sunk so much money into promoting the Droid, only to see rumors of a Google Phone leak out at the worst possible time: the height of the holiday shopping season? This could be a very telling moment in Google's history. At the moment, Google's mobile division does not seem to be completely in control of the message it wants to send consumers, partners, and competitors.
If Google really does plan to sell the Nexus One directly to consumers and compete with its customers, it has chosen an interesting way to announce it to the world, keeping the Google Phone rumor mill alive for months while publicly denying such plans. Apple has employed such a marketing strategy for years, insisting on near-silence regarding future product plans but benefiting enormously from the frenzy of interest in every little morsel that mysteriously pops up regarding those plans.
However, Google is not Apple. Google public-relations representatives will sheepishly admit that they have little control over how Google rolls out its products: Google is a company run by engineers, and engineers push the button when the product is ready to ship.
But when you're working in an environment with multiple partners that have competing interests, any confusion over your future plans--especially plans that would appear to yank the floor away--can breed distrust among those partners. One of Google's largest problems right now is that it has built a business model geared around the notion that it can be trusted with almost unprecedented control over the flow of information across the globe, and any cracks in that wall of trust will be exploited by its enemies.
With the way details have trickled out about the Nexus One, Google has either alienated current and future Android partners by muscling in on their turf, or set up thousands of eager smartphone consumers looking for an open alternative to the iPhone for disappointment when they realize Google merely plans to sell an expensive unlocked phone to a limited audience, if at all.
After all, Google essentially declared in its blog post that employees are testing a product with "new mobile features and capabilities" that presumably can't be found on the current crop of phones. It's almost the same language Google used to introduce Chrome OS ("our attempt to re-think what operating systems should be") while insisting that it had no competitive reasons for introducing that Netbook operating system. Few believed that line with Chrome OS, and fewer still will believe that Google is creating Android for the betterment of humanity if it really plans to sell its own phone.
By Tom Krazit