3 Reasons Google's Nexus One Is A Red Herring

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Google's Nexus One "superphone" is dominating headlines this week, siphoning attention away from CES and Apple and prompting breathless speculation on Google's plans for smartphones, the mobile channel and retail sales through its new Web store. And there's no question Nexus One is exciting, especially for those with a vested interest in the Android platform.

But too much time spent analyzing the Nexus One itself is a needless distraction from what Google's really after. Here are three reasons why the Nexus One is a Google red herring:

1. Nexus One Doesn't Quite Raise The Smartphone Bar
Nexus One is a slick unit, and the most up-to-date Android device yet available. It uses version 2.1 of Google's Android platform and has at least as many comparable features as the Motorola Droid, HTC Hero and other hot Android phones. But its gains over, say, the Droid, are incremental, just as Droid's were incremental over previous Android units. There's no iPhone-style revolution happening here.

Further, the carrier subsidy model remains. One of the big focuses of pre-Nexus One launch speculation was that the Google phone would be sold unlocked or be at least carrier-neutral. Neither of those is inaccurate -- a unlocked version of the phone can be had for $529, and both T-Mobile and Verizon have been named as carriers so far, with potentially more on the way -- but Google hasn't exactly flipped the script on how smartphones are priced. You can buy it unlocked at a premium, or buy it for south of $200 ($179 to be exact) if you're willing to lock in. As analysts from Goldman Sachs (and any number of other observers) pointed out Wednesday, "The price tag of the Nexus One does not seem aggressive enough to entice potential iPhone buyers."

2. One More Time: The Store Is The News
It's worth repeating: Google is now an e-retailer, and the Nexus One is only the first in what could soon be a whole slew of products available direct from Google.

"The goal of this new consumer channel is to provide an efficient way to connect Google's online users with selected Android devices," said Mario Queiroz, Google's vice president of product management, in a Tuesday blog post describing the store. "We also want to make the overall user experience simple: a simple purchasing process, simple service plans from operators, simple and worry-free delivery and start-up."

Queiroz might as well have written to smartphone and other electronics retailers and said: Google doesn't need you. It can very well say the same thing to OEM partners like Motorola and mobile solution providers who might have eyed a Google phone with the same interest they reserved for channel programs from Research In Motion, Palm and other smartphone makers with designs on business enterprises.

Whether Google believes its own retail channel sales hubris is another thing. ChannelWeb calls and e-mails to discuss the matter with Google executives have yet to be returned.

3. Google Has MDP Ambitions
Google's ambitions are perhaps best summed up by what some observers have called a push to become a managed device platform (MDP) vendor. That is, Google controls the device, the guts of the device, the applications for the device, how the device is delivered and how the device is paid for.

"We believe that MDPs will define the new high-end devices over the next five years," wrote researchers at analytics firm DataMonitor in a Wednesday note. "As smartphones are pushed further into the mass market, the important distinction of a phone will not be smart or not smart but managed or unmanaged. This new category of managed devices will be delivered by a handful of vendors that have the resources to manage the end-to-end delivery of Web services to consumer devices. Google will be one of these vendors."

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