Why Google's Nexus One Smartphone Isn't Meant to Take Anything Away from Apple

Posted Jan 4th 2010 1:20PM by Brian White
Filed under: Competitive Strategy, Google (GOOG), Apple Inc (AAPL)

Apple's (AAPL) iPhone has reinvigorated the wireless handset industry. It was there first (in many ways) and it will be hard for any company without virtually unlimited resources to wrestle the golden crown from Apple. First movers generally don't relinquish their titles.

With Google (GOOG) set to announce the "Nexus One" handset tomorrow based on its own Android mobile operating system, does it want a piece of Apple's action? Is that its goal?

Hardly. Even with Google's financial might and enormous engineering talent that, like Apple, produces products "that just work," Google won't dethrone Apple here. The Nexus One is purported to cost $180 with a two-year commitment from carrier partner T-Mobile USA -- and a whopping $530 from Google itself with no contract. Americans have been conditioned to not pay full price for any wireless product, which will make Google's strategy pretty normal.

Google, however, wants to get as many Android-powered devices into the hands of consumers in which it will slowly introduce advertising to bolster its online search ad revenue (which almost single-handedly keeps it afloat). Many of the applications in Google's Android marketplace have built-in Google ads -- the real reason Google wants to compete in the mobile space. It's not about taking market share away from Apple's firmly-entrenched position. It can't do this with Apple's huge head start and cultural integration. But, Google can try to be a strong second and rake in ad dollars a pinch at a time like it's done for almost a decade now -- something that has made it billions in cash every single quarter recently.

Tags: App Store, Apple iPhone, AppStore, GOOG, Google Android, Google Nexus, inthenews, nexus one

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Reader Comments (Page 1 of 1)

1-04-2010 @ 5:49PM

Alex Schwartz said...

Totally agree with your assessment here - I think GOOG is positioning the Nexus One the same way they are positioning the Netbook (Q4 2010) - it isn't the king of its domain, but it still will have a bunch of more tech-savvy people who are interested in using the device.

One other thing to note is that Google advertising is starting to creep into the Apple App Store's free applications - I am not sure how much Adsense is pulling in from some of these applications, but it stands to reason that the transition to the smartphone has been beneficial to Google on the whole.

One thing I found interesting to post about on my own blog was the fact that Google operates 3 of the 10 most visited sites for smartphones, regardless of whether it's an iPhone or an Android OS that's doing the browsing. My writeup of this, as well as other general musings on GOOG, can be found at my blog:

http://investsmarter.wordpress.com/2009/12/24/goog-and-the-smartphone/

1-05-2010 @ 11:29AM

Indranil Sengupta said...

We forget that the smartphone space itself is expanding rapidly. More and more cell phone users are opting for the smartphone these days. Also, once a user gets hooked onto the smartphone they get used to it and will never ever go back to a regular phone. Very soon almost 80% of cell phones sold will be smartphones.
So, Google's entry into this market is more to get in on the future potential rather than take away market sare from Apple. There is going to be enough market developing without them having to eke out market share from Apple or RIMM for that matter.
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