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Nexus One Is A Market Cannibalizer

As noted by my BNet colleagues, Google releasing the Nexus One phone is a dangerous step. The problem I see is a classic one: The easiest way to frustrate developers is to have the publisher one-up them â€"- and take from their market.

Last month I had an interesting conversation with Dolby Laboratories, one of the principles behind the Avatar 3D technology -- and part of the reason for Avatar's one billion dollar success which I'm currently eating crow about.

Regardless, when asked how it stuck around for more than a half century, one of the reps said it never competed against its own users. For example, as Dolby Surround Sound became a staple in stereo systems, the company itself didn't create Dolby headphones, Dolby hi-fi packages and Dolby televisions. Instead, it parlayed and continued to make a mint licensing its then-groundbreaking technology.

The problem with the Nexus One is that Google will always have more leverage than its competitors. Google has more money, Google has more exposure and Google has unlimited access to the technology. The Nexus One is now being advertised on the Google homepage -â€" something the 'Droid enjoyed briefly, but I suspect the Nexus One will enjoy much longer.

Furthermore, since Google is ultimately in control, it would seem impossible for it to make objective decisions about the mobile platform itself. If a change would benefit the dozen other Android phones but hamper or give middling results to the Nexus One, would Google be willing to take that sacrifice?

In the end, it doesn't matter what decision Google would make. Just the appearance of impropriety is damage enough â€"- and the damage has already been done.

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