Page last updated at 04:33 GMT, Wednesday, 6 January 2010

Google's new phone to protect mobile advertising base

By Maggie Shiels
Technology reporter, BBC News, Silicon Valley

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Rory Cellan-Jones tests the new Nexus One

Google has said it is defending its online advertising empire with the launch of its own brand mobile phone.

It is the first time Google has designed and sold its own consumer hardware device.

Google said the Nexus One represented the next frontier in the company's $20bn (£12.4bn) core business - selling advertising through search.

"It's all about the mobile web, and advertising is their bread and butter," said analyst Michael Gartenberg.

"It's the latest salvo from Google on the wireless industry. The landmark news here is that Google is now a consumer electronics retail company," added Mr Gartenberg, of Interpret.

The Nexus One means this will be the first time Apple has to be reactive
Robert Scoble
Tech blogger

Google, like many in the industry, recognises that more and more people are accessing the web via their mobile phones rather than through their desktop or personal computers.

In the developing world, the majority of users are going online for the first time using a smartphone.

"The new paradigm is mobile computing and mobility," David B Yoffie, a professor at Harvard Business School, told the New York Times.

"That has the potential to change the economics of the internet business and to redistribute profits yet again."

Apple 'cool' fading?

Google has called the Nexus One a super phone, no doubt to set the device apart from the other players, including the BlackBerry and Apple's iPhone.

Despite its much anticipated arrival on the scene, many industry watchers do not think the Nexus One is an iPhone killer, though they do believe it will force Apple to step up its game.

NEXUS ONE HANDSET
Close-up of Nexus One, Getty
3.7 inch touchscreen
1GHz snapdragon processor
5 Megapixel camera with LED flash
GPS and compass
Accelerometer
Noise cancellation technology
Voice recognition can be used with all applications
Light sensor changes screen brightness to conserve power
512MB Flash memory with SD card slot (expandable to 32GB)

"Google is coming at the mobile industry with a lot of horses and I think 2010 is the first time Apple is going to have to chase something," said technology blogger Robert Scoble of Scoblizer.com.

"For the last three years the iPhone has been way out in front in the mobile space in terms of mindshare. The Nexus One means this will be the first time Apple has to be reactive," Mr Scoble told the BBC.

To date, the iPhone has sold about 30 million units and spawned countless imitators, including this new phone.

The technology blog TechCrunch said that the Nexus One looked more like the iPhone than any other phone on the market.

There is no physical keyboard, it has a removable battery, a 5 megapixel camera, touchscreen, and is driven by Google's Android operating system.

Google says the phone is as thin as a number 2 pencil, at 11.5mm, and as light as a Swiss army knife keychain at 130g.

Google's Eric Tseng demonstrates the vocal command features on the Google phone

"The Nexus One is an important milestone in the smartphone market," said TechCrunch founder Michael Arrington.

"This is a software company frustrated with making compromises with hardware manufacturers, that has taken the product bull by the horns. When combined with Google Voice, there is no phone on the market today that can touch the Nexus One."

Google has voice-enabled all text boxes on the device, which means that users can put together an e-mail message or tweet by speaking into the phone rather than typing text on the touch screen.

Pricing models

As well as going into the hardware business, Google is also trying out something different by offering the phone to users without being tied to a contract with a mobile phone operator.

It is offering the Nexus One through its online store at $179 (£112) if users sign up to a two-year plan with T-Mobile, or $529 (£332) without a plan.

Screengrab of Nexus One page, Google
Google will host a web store that will sell the Nexus One

Some believe Google should have been braver with its pricing options and offered a sweetener by subsidising the phone through its advertising revenue.

"It would have been nice to see them roll out something a bit more unique," Danny Sullivan, editor of SearchEngineLand.com, told BBC News.

"Google has speculated in the past that there one day might be phones that are entirely ad-supported and because Google is this huge ad behemoth, this was a natural opportunity to roll out a phone like that."

The Nexus One was built by Taiwanese electronics manufacturer HTC.

It joins about 20 other devices that already run on the Android operating system.

At the moment, the Nexus One is only available in the US but will be sold in Europe, Hong Kong and Singapore in the spring through Vodafone. Google said it hoped to add other devices and carriers for sale in the future.

Crossover

Google's emergence as a retailer is regarded as an escalation in the budding rivalry between Google and Apple.

But it is not all one way.

Ahead of the launch of the Nexus One, Apple announced a deal to buy mobile advertising service Quattro Wireless. It is seen as an effort to counter Google's planned $750 million acquisition of rival AdMob.

"If there is any doubt that 2010 is the year of Mobile Advertising, Apple just cleared up any speculation," said Paran Johar, chief marketing officer of competing mobile ad network Jumptap.

"For pessimists who thought the Google acquisition of Admob was a fluke, this reinforces that mobile advertising is here to stay," he said.

"Handset manufacturers, software providers, infrastructure vendors, and carriers are all looking to connect the dots and carve out a share of what will be the primary access point of the Internet in five years."



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