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Google unveils its 'super phone'

Mario Queiroz, vice-president of Product Management for Google, displays Google's Nexus One smart phone during the unveiling at Google's headquarters on Jan. 5.

Pool/Getty Images

As online computing rapidly goes wireless, Google Inc. is betting its "super phone" will help keep the company the king of search.

By launching its long-anticipated Nexus One wireless device with Google's Android operating system, Google is wading into a lucrative but hotly competitive segment of technology, hoping to ensure its highly profitable search engine - and accompanying advertising - will remain a premier gateway to the Web for consumers even as computing rapidly evolves into a wireless experience.

But the Nexus One, which will be marketed directly to customers through Google's online store, threatens to disrupt the traditional way the vast majority of wireless devices are sold today.

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Though Mountain View, Calif.-based Google is also launching its device through some carriers, the direct approach offers a bypass of the current model, where major wireless carriers sell devices to consumers, usually at discounted prices, and lock them into long-term contracts.

Google's self-described "super phone" is unlikely to shake up the market like Apple Inc.'s iPhone did a few years ago, analysts said.

The Nexus, which operates an advanced version of Android, has some nifty features, such as a dictation-to-text e-mail function and a voice-activated GPS widget that speaks directions out loud.

But the device's capabilities for the most part are similar to what others already offer: voice, Web browsing, e-mail, and a variety of applications such as weather updates.

The phone is, however, more important for what it signifies than what it actually is. For consumers, it lends Google's brand power to the previously niche market of "unlocked," customizable phones. It's also an assertion by Google that it will take every step to avoid being relegated to the Internet of the past and present. It's also a major bet that search and advertising will be as important on mobile devices as desktops and laptops.

Google came along and realized a lot of the handset makers were lagging. ... Ultimately, they want to drive traffic back to their search engine Deepak Chopra, a technology analyst at Genuity Capital Markets


"This is the next front of our core business," said Andy Rubin, Google's vice-president of engineering, who noted the company's lucrative advertising revenue is the key to its success. "This phone is looking a lot like your laptop did four or five years ago."

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Kaan Yigit, president of the Toronto-based consultancy Solutions Research Group, said Google "looks at the phone as an enabler and extender of their business model. It's the equivalent of Gillette giving away the razor as it makes money with blades."

A partnership with HTC Corp., the global Taiwanese handset-maker that designed and manufactures the phone, allows Google to "carve out" prime real estate in the mobile Web search market, said Deepak Chopra, a technology analyst at Genuity Capital Markets.

"In the medium to long term, we have to believe that mobile search will become just as important as land-line search," Mr. Chopra said. "Google obviously recognizes that and they're moving down that road map to make sure they carve out their space."

"If you take a look historically, handset manufacturers have developed their own operating systems," he added, such the ones that run on Apple Inc.'s iPhone and Research In Motion Ltd.'s BlackBerry.

"Google came along and realized a lot of the handset makers were lagging. ... Ultimately, they want to drive traffic back to their search engine."

The Nexus One will cost $529 (U.S.) without a plan and $179 on a two-year contract from T-Mobile USA. Google plans to partner with other handset makers, as well as wireless carriers.

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At launch, the phone can only be shipped to the United States, Britain, Hong Kong and Singapore.

"We'll gradually roll it out" internationally, said Wendy Rozeluk, a Google Canada spokesperson.

However, the unlocked phone, which operates on the GSM network, could be purchased outside Canada and used here because all it requires is a SIM card, Ms. Rozeluk added, though she doubts such devices would work at optimum speeds on some advanced networks.

Unlocked phones sold at full price, without the subsidies inherent in long contracts, are common elsewhere, but not in Canada, said Tony Olvet, vice-president of communications research at IDC Canada. But with Wind Mobile, which launched in December, and other new entrants coming to Canada, that may be changing.

"Google's definitely on to something," Mr. Olvet said. "It opens up a new channel, which is to not rely 100 per cent on the carriers. Canada's very used to that, but in other country's that's not the case."

But Mr. Olvet said as long as consumers are still using wireless carriers' data plans, revenue will still flow to the carriers - and to Google, since people will be accessing that data via Android operating systems or Google's search engine.

Noting that smart phones are increasingly acting as a consumer's computer of record, Mr. Rubin, Google's vice-president of engineering said, "We're trying to make sure a lot of people have great access to Google services. ... If you want the phone, you go to the store, you grab the device, and the advertising model takes off."

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