Why Google launched the Nexus One

So what to think about Google’s mobile phone announcement yesterday?

I’ve already written about the bloggers verdict on the Nexus One. But I’m more interested in the company’s move to sell the phone directly to customers on its new online store, and that people will then be able to buy a separate SIM card to choose what network they want to use.

Do we need to pay more attention? Have we just seen a revolution?

Some are arguing that Google has just upended the mobile phone industry. Not only have they become a powerful new rival to handset makers like Apple and RIM (which makes BlackBerry phones), they are challenging the way the mobile operators traditionally do business.

You can’t doubt that Google think this is a big deal for you, the consumer. Hence the fuss of yesterday’s announcement, timed just before the Consumer Electronics Show begins in Las Vegas, which could be seen an attempt to overshadow that event.

But I think, in the long run, this is less to do with consumers and more about business strategy.

David Pogue in the New York Times summed it up nicely :

I mean, it’s a great idea and all. It’s just that, well, apart from the iPhone, who really cares which carrier has a certain phone? In the list of complaints about American cellphone carriers sent to me by readers, that one is waaaaaay down the list.

Agreed.

I see this an effort to prod the industry – handset makers and mobile operators alike – to embrace Android, its operating system for mobile phones.

By setting up an online store for phones, Google gets a toehold in the mobile market. They disrupt the usual way of doing things, where many phones come fixed to certain networks. This may have been locking people out of choosing an Android-powered phone. Open the system up, and Google’s new software can reach a bigger market.

And Google feel like they need to make big moves in the mobile sector. Google makes its piles of cash from internet advertsing. But people are increasingly surfing the web on the phones. Google has the opportunity to cash into this trend with mobile advertising, but also faces the threat of people viewing and valuing the internet ads less.

So this can be seen as simply a clever, strategic move. Except for one thing: the Nexus One.

Google have clearly invested a lot of time and effort into building its new phone. Their online store is launched with just one product. Because Google are betting that the future is mobile, they are also taking a large bet that you’ll also want the Nexus One. Time will tell.