Is Google Making Its Own Phone?

With Google's Android smart phone platform set to explode into a major player over the coming year, the company's mobile strategy seems set: Clearly, Google is following in the footsteps of Microsoft, Nokia, and Research in Motion (RIM) by offering a platform that handset makers can utilize in multiple devices and sell via wireless carriers. But Google might have another plan in mind—and another competitor in its sights. If the reports from this past weekend are correct, Google is interested in beating just one company. And that company is Apple.

The rumors started with a Google blog posting: Some of the company's employees are now testing "experimental mobile features and capabilities" on an unnamed Android-based mobile device, the company 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," Google Vice President Mario Queiroz wrote in the Google Mobile Blog. "We shared this device with Google employees across the globe. This means they get to test out a new technology and help improve it."

The blogosphere was having none of that. Rumors immediately popped up, declaring that this device was the long-expected Google Phone, or gPhone, and that Google would take on Apple directly (or, as The New York Times put it, in "handset-to-handset combat"). Photos of the device began appearing on Twitter and elsewhere, and from the looks of things, it's very iPhone-like, with no hardware keyboard, a large touchscreen, and a curved, slim form factor.

The Wall Street Journal gave credence to the rumors on Sunday when it declared that Google is planning to sell its phone, called the Nexus One, directly to consumers in 2010. It will be sold unlocked over the web and won’t be subsidized by a wireless carrier. As a GSM device, it will run only on the lackluster AT&T and T-Mobile wireless networks in the United States but is internationally compatible. (The superior Verizon Wireless network uses incompatible CDMA technology.)

And although it might seem that Google is competing directly with the wireless carriers that now sell several other Android-based phones, reports indicate that this isn't necessarily a problem. The Nexus One won't be subsidized, so it will likely cost several hundred dollars—an expense that customers would have to pay upfront. With subsidized Android phones, customers typically pay only $100 to $200 upfront. This situation could provide Google and its customers with a best-of-both-worlds scenario, in which Google offers both a direct iPhone competitor, the Nexus One, that it can completely control, as well as a wide array of subsidized phones that can compete with other handsets via wireless carriers.

Beyond its comments about a mobile lab over the weekend, Google hasn’t corroborated the rumors or Wall Street Journal report. But it's worth noting that Google has already offered two Android-based phones—the Android Dev Phone and the Google Ion—directly to customers via its website. Neither has exactly set the world on fire from a sales perspective. So it's unclear what difference, if any, the Nexus One would make.

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