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Nexus One: Not a Game-Changer


Google's new smartphone will be the new cool thing—for a month or two. But it won't take the wind from Apple's sails

It's a nice phone. O.K., it's a very nice phone. But nothing about the new Nexus One smartphone from Google (GOOG) comes close to warranting the 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 Clichés. It is, instead, a sleek phone running Google's Android operating system, 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 (AAPL), Microsoft (MSFT), and Research in Motion (RIMM) 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. Still, I find it hard to swoon over a business model.

The Nexus One, manufactured by Taiwan's HTC to Google's specifications, is similar in both size and shape to the iPhone. If anyone ought to feel threatened by it, though, it's Motorola (MOT), which committed to using Android for all its smartphones and now must compete with its powerful partner.

The screen on Motorola's Droid used to be my favorite—super-bright, with higher resolution than the iPhone. The Nexus One's display is better: a thing of beauty, with an even richer display and deeper colors. Under the hood, Google's phone has the most powerful microprocessor ever used in a mobile device. And unlike the iPhone, it has a replaceable battery, a memory-card slot, and expanded speech-to-text features so you can dictate your Facebook or Twitter updates, should 140 characters prove too taxing for your fingers.

At the same time, the Nexus One shares the shortcomings of earlier Android and HTC phones. In terms of the number of apps, Android phones trail far behind the iPhone. So does Android's ability to sync with Microsoft Outlook for e-mail, calendars, and contacts. The app icons on the Nexus One are too small and close together. And its 4 gigabytes of storage is inadequate and inflexible—only 190 megabytes are set aside for apps. 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.

Google's real innovation is in how it's selling the Nexus One, a path it will continue to pursue with future products. Most phones in the U.S. are tied to one or another 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 Google $529 and purchase service separately.

At launch, there isn't much of a choice for service. The only carrier currently offering a plan is T-Mobile USA, which charges $79.99 per month. Most folks are probably better off going this route, for now. In theory, you can also use a SIM card from AT&T (T), but you'd have to use AT&T's older, slower Edge network, not its 3G network.

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 will offer service in Europe. By compelling carriers to compete with one other, Google will weaken their control, meaning more power will eventually flow 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.

For past columns and additional tech coverage, go to businessweek.com/technology

To contact the reporter on this story: Rich Jaroslovsky in New York at rjaroslovsky@bloomberg.net .

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