Nexus One: The Google Phone That Wasn't

So I was wrong about Google (Nasdaq: GOOG  ) staying out of the cell-phone retail market. The Nexus One phone, made by Taiwanese hardware designer HTC but branded as Google's, and Google's alone, is available now to any Tom, Dick, Harry, or Sally on the street.

The Nexus One looks like a great product, clearly sexier than the Samsung model I was drooling over last summer (and which sort of made it to T-Mobile recently with new software and a new name). Powered by a high-end Qualcomm (Nasdaq: QCOM  ) SnapDragon chip that makes the Apple (Nasdaq: AAPL  ) iPhone and Palm (Nasdaq: PALM  ) Pre look like slugs crawling through cold molasses, the Nexus One also features a beautiful OLED screen, five-megapixel camera, and all the usual bells and whistles of a modern smartphone. I won't sneeze at the software either -- the 2.1 version of Android supports voice input for pretty much everything and features ultra-slick 3-D graphics.

But that's not the point. Google isn't even trying to market the Nexus One hard, the way Verizon (NYSE: VZ  ) went on an all-out attack worth $100 million or more to push the Droid model from Motorola (NYSE: MOT  ) . Instead, Google is selling this phone on the sly with prominent Nexus One ads popping up in places like YouTube's front page and atop any Google search for a "phone."

If the Nexus One becomes a huge success, it would be a testament to the power of online marketing. Google doesn't intend to sell its phones in physical stores where customers can finger the goods. Launch partner T-Mobile isn't even selling the Nexus One in its own online store, and I suppose Verizon Wireless won't do that either when a Verizon-compatible model becomes available later this spring.

This ain't no iPhone killer, folks. Don't sell your Apple stock based on this announcement, and hang onto your Research In Motion (Nasdaq: RIMM  ) stubs, too. Google expects to launch several Android models in the just-born online Google phone store, but none of them will devour the mobile market, nor kill any specific competitor. What Google is doing is simplifying the consumer's phone-buying process -- choose a phone, then pick a network -- and simply populating that revolutionary store model with a design of its own. I fully expect to see other brands in Google's phone store shortly, along with every major mobile service provider.

Simple shopping means more Web-browsing smartphones in the hands of consumers. That, in turn, feeds Google's cash machine. That's just how this Rule Breaker rolls.

Do you want a Nexus One? How about some Google stock? Discuss your desires in the comments below.

Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. Google is a Motley Fool Rule Breakers recommendation. Apple is a Motley Fool Stock Advisor choice. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 06, 2010, at 3:31 PM, DefunctAcct wrote:

    I like the objectiveness of this article but I wish the author would have added more details. There is a lot of good objective writing by very knowledgeable people online that Mr. Bylund can cite. My response here is not to disagree with Mr. Bylund but to share a couple of thoughts.

    Google is trying to simplify purchasing and service selection but that is not happening with Nexus. Buy the phone and try to use on ATT and you get EDGE. Why? The phone is tuned to T-Mobile's 3G signal. So to use 3G, you need to get service from T-Mobile. It is not as simple as it seems.

    Snapdragon is "fast" but what is its actual execution speed when running an application? How sophisticated is that application? One cannot simply consider the speed without paying attention to the amount of RAM available and sophistication of a program.

    For example, a relatively simple Mail program may be blazing fast on Nexus due to the CPU and the Mail program's relatively small RAM footprint. It may (purely hypothetical) beat out the iPhone or RIMM or Palm devices.

    On the other hand, if Nexus has to run a complex graphics intensive interactive rich media applications, with its lack of RAM, just like any PC on our desks, performance will suffer. Will it be then as fast as iPhone or Berries or Pre?

    So the speed is dependent on who is using the device and what that person runs on that device. It is akin to buying a 3.06 Ghz netbook with 256K RAM trying to run a multi-process simulation applications demanding 8GB of RAM? Or using the same to run a simple mail program?

    For investment purposes, it is important to really get a good handle on the technological differences and the strategic product roadmap going forward. This means getting information from reliable sources and not rely on biased ill-informed pundits (*NOT* referring to Mr. Bylund) who posts ill-conceived opinions online.

    Android is not a killer of anything. It is one of many competing offerings. To fully understand what it is, it pays for investors to educate themselves and that could include looking at the SDK website. Same for Palm and same for Apple. You need not become a software engineer but you need to at least understand, without bias, what are the technologies and the important concepts backing each company's offering. Only then can you make independent decision that best fits your own position.

    I still remember precisely what Dell said way back when about Apple. He thought then Apple should close up shop and be gone. Does anyone here remember? Did anyone invest based on that assessment? I snapped up Apple when it was in the $10-$12 range.

    When iPhone came out, Ballmer laughed it all off and thought iPhone would crash and burn. Palm's then CEO bluntly said computer people could not possibly know how to do "phone".

    Ballmer was at least talking about business perspective but Palm's CEO really made himself out to be a fool. Guess what the Treo and other devices were if not computers? What was his company if not a computer company building handheld computing devices specifically targeting a specific usage? There is a strong reason why Palm is where it is today.

    I have enjoyed Mr. Bylund's writing but I will encourage everyone else to do more independent studies and independent research. Knowing more does not imply you will never make investment mistakes but knowing nothing definitely increases the likelihood of mistakes.

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