Monday Note

Let me state it at the outset: I understand the buzz generated by the Google Phone a.k.a Nexus One. But, the more I look into details and their ramifications, the more I’m puzzled. What exactly is Google trying to do? Make Android, their smartphone OS platform the “Windows” of the new era of really personal computers? Or become a dominant handset player to effectively compete with RIM’s Blackberries or Apple’s iPhones? Or, third possibility, dominate the new world of mobile advertising as it does the “old” universe of Web ads for PCs?

Let’s start with the product.

It’s not really a Google Phone. Its real name is Nexus One and it’s made by HTC, the well-regarded Taiwanese handset maker that produced the first G1 and G2 Android phones — as well as their Sidekick ancestor from Danger. Microsoft bought that company but the CEO, Andy Rubin joined Google as head of the Android team.
But, you’ll object, most cell phones and smartphones are made by one company, a manufacturing subcontractor and branded and sold by another. Apple doesn’t make its iPhones, nor does RIM make any of its Blackberries, to use but two well-known examples. Indeed, the Nexus One is sold by Google at www.google.com/phone. If you already have a Google Checkout account, the purchase process can’t be simpler.

Still, take a closer look at the Terms of Sale. There, you’ll find you have 14 days to return the phone (unless you live in comfy California where it’ll be 30 days). An even closer look at the return instructions reveals you must call HTC’s Service and Repair department, not Google, to return the phone or to get it repaired.
How this will fly with customers used to a retail presence and personal service remains to be seen. When I had trouble with my trusty Blackberry, I walked into the Verizon store and quickly got my unit exchanged. Same when my iPhone suddenly heated up and drained its battery in 45 minutes. Diagnostic software at the Apple store confirmed the problem; I walked home with a new unit and reloaded my backed-up data and applications using the ecumenical iTunes desktop client. This is today’s state of the art and I wonder how Google expects to compete without a retail presence.
Things look even stranger when you recall how Google’s first G1 phone was sold and supported: through T-Mobile’s retail network, one whose good reputation for competent service I could verify when I bought a G1 more that a year ago. Why did Google take what looks like a step back? Especially when the Nexus One is designed for T-Mobile’s 3G network.

One possible explanation: Google is worried about the linuxification, the babelization of the Android platform and applications. Android being an Open Source platform, handset makers and carriers are free to modify it as they please. And, in their view, modify they must because they need to differentiate themselves, to create exclusive hardware, applications and UI features. Otherwise, they’re doomed to a race to the bottom, to ever decreasing margins as Google benignly smiles on. But the G-smile disappears if Android applications don’t run everywhere. Imagine how much less money Microsoft would make if PC makers were free to modify Windows as they pleased.

All this puts Google into a challenging position: they put out a reference product, the Nexus One, with full control of the “stack”: hardware, OS, applications and UI, arguably better than what’s available to their “partners”. But they let said partners modify Android as they see fit.
Will this last?
We’ll have to see what happens with other carriers such as Verizon, one that is ferociously opposed to interlopers telling it which handset and what applications run on its network.

Google could become a softer Microsoft, one that manages by example and minimize Android babelization. As a result, the platform would offer enough consistency: key Google applications would run well enough on a large enough variety of handsets giving the advertising giant the manageable playing field it needs.

Or Google could decide to become more like the older, harder Microsoft. In practice, licensing terms would change and force handset makers (and carriers) to use one and only one version of Android and Google applications. For free but for sure. This would guarantee the compatibility and clean advertising playing field just evoked. But would handset makers and carriers accept a mere iteration of the Microsoft PC ways? A better Windows Mobile, free.

In its quest for dominance, Google faces two well-managed and very focused adversaries, RIM, whose Blackberries are the US best-sellers, and Apple. In the coming months, we’ll see which path Google picks to gain the upper hand over those two: the Linux way (today’s strategy of record), the softer or the harder Microsoft.

—JLG@mondaynote.com

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