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Will Google prove to be as smart as its new phone?

Goggle will sell the Nexus One phone directly to consumers. It will be unlocked, meaning that customers can buy the service plan separately.

Associated Press

Goggle will sell the Nexus One phone directly to consumers. It will be unlocked, meaning that customers can buy the service plan separately.

SAN FRANCISCO — Google unveiled a rival to Apple's iPhone on Tuesday, part of its careful plan to try to do what few other technology companies have done before: retain its leadership as computing shifts from one generation to the next.

Vic Gundotra, a vice president of engineering at Google who oversees mobile applications, said its goal was to push the cell phone industry toward a more open approach to the Web.

At a presentation in Mountain View, Calif., Google made official its plans to sell its own mobile phone, called the Nexus One. The rapid emergence of the smart phone as a versatile computing device may be as much a challenge as an opportunity for Google, which built its multibillion-dollar empire largely on the sale of small text ads linked to search queries typed on PCs.

As people increasingly rely on mobile phones instead of PCs to access the Web, their surfing habits are bound to change. What's more, online advertising could lose its role as the Web's primary economic engine, putting Google's leadership role into question.

"The new paradigm is mobile computing and mobility," said David B. Yoffie, a professor at the Harvard Business School. "That has the potential to change the economics of the Internet business and to redistribute profits yet again."

The Nexus One, a thin, touch-screen handset built to Google's specifications and made by the Taiwanese company HTC, is a challenge to a newly minted industry power: Apple, whose iPhone dominates the high end of the smart phone market.

Analysts say that with the Nexus One, which Google plans to sell to consumers directly, the company is trying to free itself from Apple's growing influence. It also wants to broaden the appeal of the phone's technology. It is expected to be sold unlocked, allowing consumers to buy service plans separately.

In recent decades, the power of industry giants like IBM and Microsoft, which once seemed unassailable, waned as computing shifted from big mainframes to PCs, and from PCs to the Internet. Many analysts say it is now Google that is faced with an uncertain future in the face of another shift.

Still, they say Google saw this coming years ago and has been preparing for it. Google executives now say they are confident that the company will thrive as the mobile Internet grows.

"We are incredibly excited about the opportunities that we see in mobile," Gundotra said. "We have invested a considerable amount, and we can now really provide a compelling mobile experience."

Top Google executives, including chief executive Eric E. Schmidt, have long said that the mobile Internet was Google's biggest opportunity for growth. They orchestrated a string of acquisitions of companies with mobile-related technology, including Android, maker of a cell phone operating system; GrandCentral, a service for making calls that can bypass telephone lines; and AdMob, an advertising network for mobile applications. The AdMob deal is awaiting regulatory approval.

Google also invested far more aggressively than its competitors in mapping technologies and services tied to a user's location, which are likely to become the underpinnings of new advertising systems on Global Positioning System-equipped mobile phones.

And in recent years, Google has worked to loosen the hold that other companies have on the mobile industry.

Gundotra said all of Google's mobile moves were driven by one objective: pushing the industry to open up in an attempt to replicate on mobile phones the environment that has allowed the PC-driven Web to grow.

Some analysts say that with the early success of the Android operating system, which is built into phones from several manufacturers, Google is already beating Microsoft, its biggest rival, in the mobile business. And they note that mobile phone software is tethered to the Web more than PC programs, playing to Google's strengths in Internet computing.

Yet some questions remain unanswered: Will advertising remain central to the Web economy as consumers shift to mobile phones from PCs? And will applications change people's reliance on search engines?

"It certainly remains to be seen how big mobile advertising will be," said Charles Golvin, an analyst with Forrester Research.

What they're saying

. Engadget: The Nexus One is at its core just another Android smart phone. It's a particularly good one, don't get us wrong — certainly up there with the best of its breed — but it's not in any way the earth-shattering, paradigm-skewing device the media and community cheerleaders have built it up to be.

. TechCrunch: The Nexus One is the best Android-powered phone to date. It's also the fastest and most elegant smart phone on the market today, solidly beating the iPhone in most ways. Unlike previous Android phones, the Nexus One has no obvious flaws or compromises. The phone is the state of the art in mobile.

. Fox News: The Nexus One is very similar to the other phones running Google's Android operating system, such as the T-Mobile G1 and the Motorola Droid. While decidedly nicer looking, it isn't distinct enough to wrest market share away from the Apple iPhone.

Will Google prove to be as smart as its new phone? 01/05/10 [Last modified: Tuesday, January 5, 2010 9:48pm]

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