Google reportedly developing own smartphone

Google will begin selling its own, unlocked smartphone running its Android platform sometime next year, according to a report in the Wall Street Journal this week. The device, which is being called Nexus One, will be made by HTC and will be sold online without wireless service. Customers will have to buy service separately, according to the report that cited unnamed sources familiar with the matter.

Bernstein Research analyst Jeffrey Lindsay believes that the wild success of the iPhone has forced Google to make its own device. By offering an unlocked alternative to existing Android phones like the Motorola Droid, it wants to challenge Apple's dominance, Lindsay said in a research note. Nearly 10 million iPhones are expected to ship in 2009.

Google employees are reportedly testing the Nexus One, and Google is allegedly poised to receive support from T-Mobile USA. The Wall Street Journal also reported that Google is working with T-Mobile USA to sell its upcoming HTC-made smartphone at a discount to customers who sign a T-Mobile contract, in addition to selling the phone unlocked.

"Specifically, we think Google is anticipating the expiration of Apple's exclusive arrangement with AT&T reportedly in June 2010 (although never confirmed by either side)," Lindsay wrote. "This would open the possibility that Apple could get access to Verizon's superior 3G network, challenging the Google/Verizon Droid initiative directly, and forcing Google's hand to get more involved in the mobile data hardware space."

At any rate, selling unsubsidized devices in the U.S. is a tough sell, as consumers are accustomed to paying a few hundred for the top smartphones in exchange for a two-year contract.

 For more:
- see this WSJ article (sub. req.)
- see this eWeek article

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