Nexus One- The Second Coming Part 2

As I pointed out yesterday, the Nexus One is a great phone. Given its limited distribution and status of an iPhone-near-equal, it is not an iPhone killer. That being said, it certainly demonstrates Google’s path to the near future.

Google is, like Apple several years ago, trying to break into an exclusive club…the oligopoly of cell phone service providers that controls access to the mobile internet. For Google, gaining this access is a down payment on their long term need to guarantee their future ability to deliver ads.

But Google is entering a smartphone market that is different than Apple found and it is one that is more and more being defined by Apple. For both Google and Apple, success in the US market will be assured when both are represented at the two major carriers. This is no mean task as the market leaders (ATT & Verizon) really have little interest in ceding any more control of their networks than they already have. Google needs a different path than Apple but their need is no less compelling than Apple’s to “break in” to an internet world that could offer two times the size of the desktop internet.

Apple was able to use the iPhone to break into the ranks of the major cell service provides and in doing so gave ATT the power to attract new customers at a rate faster than Verizon. Verizon, I think, hoped that RIM, MS or Nokia might provide an alternative to the iPhone on their terms but none did.

Verizon needed to stop the bleeding. In a mature phone market with few new customers coming in, nothing is worse than losing customers coming off contract and they were loosing them to ATT & the iPhone. The recently introduced Droid, while not quite the equal of the iPhone, gave Verizon a credible story to stop the bleeding. And it gave Google a needed entree into one half of the the big leagues.

Google still needs to convince the AT&T that it is in the carrier’s interest to play ball in a way that Google wants and needs. I would imagine that for Google to make their Android OS a success, the process of dealing with the likes of Verizon & ATT is part compromise, part bravado and part engineering brilliance.

Google, by creating a phone that is directly compared to the iPhone and being the first company to deliver a phone that is widely considered a contender in this game, has proven that they can offer big cell companies an alternative. Big cell phone companies can’t abide by wannabes. They need winners to attract new sign ups. And Google needed a winner to even sit at the table. Like the iPhone before it, Google doesn’t need to have dominant market share for the phone to be considered a success. At least now, Google has their attention and has successfully positioned themselves as an alternative for ATT.

Apple though, is not a static entity in this complex dance. They can, and will likely soon, add new hardware features that will surpass the Nexus. They can and likely soon will add new hardware that makes their iPhone compatible with the Verizon’s CDMA network. Apple wants and needs additional distribution to keep growing. It is estimated that the iPhone market share could double once they are available on the Verizon network.

Once Apple has in fact delivered a Verizon compatible iPhone, AT&T will have lost its exclusivity. It need to fill the gap and compete with the Verizon that has both an iPhone and the exclusive Droid. In that scenario, the Nexus One becomes a reference platform that can provide Google a place at the table with AT&T. For AT&T, Google is demonstrating that they can create, build, market and support(?) a phone that just might offset any gains that Verizon will get from its own iPhone

Assuming that Google and Apple are successful in meeting their own needs and the needs of the big carriers in this intricate kabuki, we will see a different cell landscape going forward. It is as much a landscape that is more hostile to the other manufacturers of cell phone hardware/os as it is a landscape where Apple and Google can be more successful. It portends a further loss of smartphone sales & market share for Palm, Nokia and Microsoft. It could even portend the demise or merger of Palm and a more difficult road for RIM. Once the Nexus (or its equivalent) makes it to ATT and the iPhone to Verizon, it is these other brands of smart phones that will suffer the most, not the iPhone and not the Nexus.

If iPhone/Android do in fact become the smart phones of choice at both major cell providers, it also foreshadows a market where the cell carriers look to control the pipe rather than the platform. They need to control something. After all, they like being in an oligopoly. There is nothing like super profits and minimal competition with few government regulations to keep them and their stockholders happy.

So in the Nexus we see a phone that shows Googles as a near-equal of Apple as a software/hardware provider, capable of satisfying the needs of the Verizons and possibly the AT&Ts of the world, able to deliver on a single, sustainable and attractive platform that positions them well into the future.

While there is a battle brewing between Google and Apple, and there may be a time when talk of an iPhone killer is appropriate, that time is not now, and the Nexus One is not that phone.

Note: A special thanks goes out to Miriam Ellis of Solas Web Design who has provided me with incredible editing and feedback over the years and on this article. I would strongly recommend her as both an editor and copywriter. All too often, my writing has both spelling and grammatical errors as well as issues of clarity. Miriam helps on all fronts and has been a godsend when I really want to get the story right!

Please consider leaving a comment as your input will help me (& everyone else) better understand and learn about local.
Nexus One- The Second Coming Part 2 by

6 thoughts on “Nexus One- The Second Coming Part 2”

  1. I think the only way Google can be ahead of Apple in technology is to design a video game system just like Microsoft did.

    Even if Google does make a newer phone that will beat iPhone some day, Apple will respond immediately with a better one in no time.

    -Kai

  2. @Kai Lo

    While I do think that for the next several iterations of phones that Apple will be able to stay ahead of the Nexus on most hardware related developments. On some things like multitouch & apps totals Google may not be able to catch up due to patents.

    But Google is the first to even come close and one assumes that they will achieve functional parity on the hardware sooner rather than later. That will make the Nexus a viable option for people who would have otherwise chosen Windows Mobile, Palm, Nokia or even Blackberry. That is who they are gunning for in this match.

  3. How nice, Mike! Thank you for the kind words. In fact, I think I shall swipe them and add them to the copywriting portion of our site.

    And, may I return the compliment in saying that your keen insight into the inner workings of Local Search is a godsend to me and to everyone reading your blog? True, true.

    I’m still having a ball getting to know my Nexus. Last night, my nieces taught me how to text. I feel like a cool kid now!

  4. Mike…I am just now seeing your blog for the first time on my Nexus. Your mobile layout looks great. I wish you would write about the conversion of your blog to a mobile format. Yours works like a charm. Look…I am even leaving a comment with ease.

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