Google's Nexus One: World-changer or just a bad idea?

If all the rumors are believed, the Nexus One smartphone is Google's attempt to change almost everything wireless

Google's Nexus One smartphone is a shot across the bow of many entrenched competitors, enough to make us wonder whether Google has some master plan for world domination or has merely gone loopy.

If you combine all the speculation, Google is merely planning to rearrange the entire wireless industry to its advantage, and perhaps in ways that benefit business customers, too.

My bet is that the Nexus One won't be a good choice for business users, but that could change as we learn more about it.

Here are four major topics of Nexus One speculation. For each, I have briefly outlined how Google could be seen as very smart or as more than a little crazy. Your comments are appreciated.

Does Google want to be our phone company?

The most interesting thing I've read about the Googlephone is the possibility that it will route all voice calls as VOIP via Google Voice. This is the "Google wants to be your telephone company scenario" that could quickly put the company at-odds with wireless carriers, Internet service providers, and most of the rest of the telecom universe.

Smart: This would be a living example of net neutrality at work, as this is something the incumbent carriers, with their huge voice infrastructure, would have a hard time accepting. If the Internet isn't neutral, ISPs could theoretically stop Google's VOIP plans.

Crazy: Google gives the telephone and cable companies a good example of how VOIP could hurt their bottom line, turn them into mere data pipeline companies, and potentially threaten their survival. This will harden their opposition to net neutrality and could help them find supporters in Congress, who prefer old, stable companies to upshots like Google.

If the Nexus One uses VOIP for voice calls, customers will only need to purchase wireless data service. Whether that will result in savings, or usher in usage-based data pricing is unknown. I suspect the latter.

Or, perhaps, Google will buy wireless data services in bulk and resell them to customers directly, effectively making Google the wireless carrier for the Nexus One.

Can Google change how handsets are sold?

Smart: Selling phones unlocked is, in a perfect world, the way to go. Why should the choice of a handset link the customer to a specific carrier? And why should carriers be allowed to subsidize hardware as another way to create customer lock-in?

Crazy: Subsidies make smartphones affordable, as we may see when the unlocked Nexus One goes on sale. In the U.S., the unlocked phone will reportedly support only the T-Mobile and (perhaps) the AT&T network. With so few options, customers may be better off with a subsidized phone than a $600 unlocked model.

How does the Nexus One play into Google's business model?

It is presumed that Google doesn't really want to be in the wireless business, but is doing so to support its other revenue streams.

Smart: Google wants to control mobile search and online advertising and sees a big opportunity in location-based advertising sent to mobile devices. To wrestle the eyeballs it needs away from the wireless carriers, Google just might find a way to subsidize a customer's phone or wireless service in a way what actually works. Buy a Googlephone, get lots of Google ads, but at a good price.

Crazy: This would be a big gamble, would lose Google whatever wireless friends it has, and heads further down the road of inviting anti-trust action by the government.

What will the wireless industry's reaction be?

Smart: Google is walking through a minefield of players and competing interests. If the Nexus One has the right combination of playing the handset makers off the wireless carriers off the customers, then Google wins.

Crazy: The wireless industry has already rejected Microsoft as a whole s well as Nokia's attempt to make Symbian a universal handset operating system. Google will trip the industry's auto-immune system and be rejected as a foreign substance, which happens to be what Google is in this regard.

My take: Something makes me think the first Nexus One, whenever it is released, will be just a toe in the water for Google. It won't be as big a deal as it seems right now.

The unlocked phone will predominately sell into foreign markets and U.S. customers will buy phones attached to a carrier, probably T-Mobile.

The VOIP angle is interesting and potentially revolutionary. It will be interesting to see if T-Mobile and other carriers will be happy just selling data service to their customers.

To what extent are wireless carriers willing to mere just data pipelines, yielding to Google top spot in the food chain?

The Nexus One could provide the answer, giving Google a big win or a hugely public failure.

David Coursey has been writing about technology products and companies for more than 25 years. He tweets as @techinciter and may be contacted via his Web site.

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David Coursey

PC World (US online)
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