Google's Phone Threatens Motorola: Rich Jaroslovsky (Update1)

It's a nice phone. OK, it's a very nice phone.

But nothing about the new Nexus One smartphone from Google Inc. comes close to warranting the mass hysteria that attended its unveiling last week.

The Nexus One isn't revolutionary. Nor is it an iPhone killer -- a phrase we should banish to the Tech Writers' Hall of Cliches. It is, instead, a sleek phone with some advancements in display and processor technology that will surely be matched and then overtaken by others in the months ahead.

True, the rapidly evolving competition among Google, Apple Inc., Microsoft Corp. and Research in Motion Ltd. is fascinating to watch. And Google's plunge into e-tailing -- the Nexus One can only be bought directly from the company over the Web -- has the potential to shake up how phones are sold.

Me, though, I find it hard to swoon over a business model.

The Nexus One, manufactured by Taiwan's HTC Corp. to Google's specifications, is similar in both size and shape to the iPhone -- a smidge thinner and lighter, a trifle longer. It runs a new version of Google's Android operating system that makes modest tweaks to the software that debuted on Motorola Inc.'s Droid two months ago.

Thing of Beauty

If anyone ought to feel threatened by the Nexus One, it's Motorola, which committed to using Android for all its smartphones and now has powerful new competition from its own partner. Just to cite one area, the Droid's screen used to be my favorite: super-bright, with higher resolution than the iPhone. But the Nexus One uses new technology that provides an even richer display, with deeper colors and blacker blacks. It's a thing of beauty.

Under the hood, the Nexus One uses a Qualcomm Inc. processor that's the most powerful ever put in a phone. It also has enhanced 3-D graphics, expanded speech-to-text features -- you can now dictate your Facebook or Twitter updates rather than type them -- a replaceable battery and a memory-card slot.

At the same time, the Nexus One shares the shortcomings of previous Android and HTC phones.

The number of Android apps trails far behind the iPhone. So does Android's ability to sync with Microsoft Outlook for e- mail, calendars and contacts, though it does provide the capability to view and work with Microsoft Word, Excel and PowerPoint files through technology from Quickoffice Inc. and DataViz Inc.'s Documents To Go.

Accidental Launches

Its app icons, which now whiz onto the desktop instead of rolling up window shade-style, are too small and close together; I too often accidentally launch an app when all I'm trying to do is scroll through them. The included 4 gigabytes of storage is too small and inflexible, with only 190 megabytes set aside for apps.

You can't pinch your fingers together or move them apart to zoom in or out on a screen. The home, back, menu and search buttons below the screen require too much pressure to push, and the trackball seems superfluous except when it glows to signal a new call or message.

The company's real innovation is in how it's selling the Nexus One and the other Google-branded phones to follow.

Most phones in the U.S. are purchased tied to a specific carrier, which subsidizes the cost of the handset in return for your commitment to a service contract. Google is seeking to separate the handset from the service. You can buy it with a service plan for $179, or pay $529 and purchase service separately.

T-Mobile

At launch, there isn't much of a choice: The only carrier currently offering a plan is T-Mobile USA, the U.S. mobile-phone division of Deutsche Telekom AG, which charges $79.99 per month. In theory, you can also use a SIM card from AT&T Inc., but the phone wouldn't be able to use AT&T's 3G network for data, only its older, slower Edge network. Outside the U.S., Google is shipping the unlocked Nexus One to the U.K., Hong Kong and Singapore.

The choices will multiply over time. This spring will see a Nexus One that runs on the Verizon Wireless network, which uses a different technology than AT&T and T-Mobile. Also in the spring, Vodafone Group Plc is lined up to offer a service plan for the Nexus One in Europe.

Google is responsible for delivering the phone -- the one I ordered on launch day last week arrived in less than 48 hours -- and will be the first point of contact if anything goes wrong.

Weakening the carriers' control and compelling them to compete with each other may eventually put more power into consumers' hands -- and, of course, Google's.

While all this is interesting, it's hardly earth- shattering. When Apple introduced the iPhone in 2007, it changed the entire way people thought about wireless devices, ushering in the era of the mobile Web.

The Nexus One? It's just a very nice phone.

(Rich Jaroslovsky is a Bloomberg News columnist. The opinions expressed are his own.)

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To contact the writer of this column: Rich Jaroslovsky in New York at rjaroslovsky@bloomberg.net

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