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What Google's Nexus One Really Means

The buzz was about the phone itself, but Google's victory has less to do with Nexus One and more to do with a sales strategy.

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In other words, Google just gave users two more ways -- the Nexus One phone and storefront -- to interact with Google that much more. It's an expansion of the business model and puts Google not only in even more direct competition with Apple and the smartphone crowd, but also with any vendor -- Amazon, Apple, you name it -- with a retail and e-tail operation.

There's no question the Nexus One is significant. Revealed Tuesday after months of intense speculation, it runs on Android 2.1, the latest version of Google's white-hot popular mobile OS, and offers 3-D visual effects, speech-to-text capabilities for messaging, and an array of other bells and whistles that don't so much make it stand out from other Android phones as be a shining example of what an Android phone can be so far.

It definitely captures Android buzz at the right time, too; Android phones like the Motorola Droid entered the new year with a head of steam, and many Android devices were among Everything Channel's 10 Coolest Smartphones of 2009.

Users can buy Nexus One right away from Google's Web store: A T-Mobile-carried version sells for $179 with a two-year lock-in, and an unlocked Nexus One sells for $529. Google also confirmed Tuesday that it will add Verizon Wireless as a carrier this spring -- a major coup by Google, especially against Apple, iPhone and Verizon rival AT&T.

But even Google admitted that the Nexus One, while ostensibly the focus of the announcement, is actually one small part of it. In a blog post summarizing the Tuesday announcements, Google Vice President of Product Management Mario Queiroz describes Nexus One as not "the Google phone" but "the first phone we'll be selling through this new Web store."

"The volume and variety of Android devices today has exceeded even our most optimistic expectations. And we believe we can accelerate the pace of innovation further," Queiroz writes. "So we thought: What if we work even more closely with our partners to create devices which showcase some of the great software technology we've been working on? And what if we make those devices available for purchase through a new, simple online Web store from Google?"

Make no mistake: the Nexus One itself advances Google's empire only so much in that it's the first offering in what Google hopes will be a massive retail sales operation. The phone is secondary; Google Vice President of Engineering Andy Rubin told reporters that it is "inaccurate to say that Google designed the phone," giving credit to manufacturer HTC, and admitted that Google expects only a small profit margin on the phones themselves.

The brand and the business model -- the endless ways to access, acquire, use, build and transact business using Google tools -- are what Google has broadened.

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