You're going to hear an awful lot about Nexus in the coming months. By now you know it's the new smartphone from Google itself, built by HTC. A Google-branded smart phone, built from the ground up by Google itself.
Not content with ceding development and market expansion to other hardware makers like HTC and Motorola incorporating Google's mobile operating system Android, Google is taking matters into its own hands (literally) and coming up with a "hero" phone of its own that'll showcase the very best of which Android is capable.
But this is a lot more than just about a new handset.
The big winner initially will be Qualcomm, which will be supplying its expensive, high-margin, and extremely capable Snapdragon microprocessor to run the device. Google isn't anticipating selling a lot of units, especially with a price tag that might exceed $400, but the phone could spur a big bunch of sales among others running Android once consumers get a very clear idea of what this operating system can do.
It's kind of the Indy Racing League approach to technology: Spend a huge amount of money on something that really showcases the capabilities, and watch those capabilities trickle into the far more affordable consumer market.
This goes much deeper, and may be the most significant threat yet to Apple and the iPhone/iPod juggernaut. Why? Ask ten people why they buy an iPod or iPhone over a competing MP3 player or smartphone, and nine will tell you that it's at least in large measure because of the easy connectivity to the iTunes online media and App Store. It's just easy.
Until now, no other company has been able to offer the same kind of platform. Hardware, software, and distribution. Ask another ten people if they're buying a smartphone running Windows Mobile, or even Android for that matter, where they will buy their music and movies, and nine will probably respond with "I don't know."
Google is the first company in a real position to change all that. On its face, the new Nexus runs the serious potential of competing directly with iPhone, not merely on a hardware basis, but on a platform one. And that should be concerning for Apple.
The potential is already very real for Google to go after Apple's MobileMe. Same with a nascent App store: An iTunes-like online digital media store, subscription based and living in the cloud, is in the offing, and now makes Apple's move for Lala.com last week all the more understandable. Google apparently was in the running for Lala as well, but decided to give in and develop its own home-grown technology.
And Google's foray into mobile digital entertainment won't end there. A source tells me that there is talk that Google will offer a capability similar to "Sync" from Ford and Microsoft. And that could end up being a threat to Sirius XM as well.
The Nexus is very real, and it's coming very soon. The rest of this is still very early, and certainly anything can happen. But we have a much better idea of why Google Chief Executive Eric Schmidt is no longer sitting on Apple's board (read, fox in the henhouse). Sources inside and outside of Google are beginning to sing the possibilities.
Apple has a big head start in all this, and that's a big hurdle for Google to overcome. But don't underestimate Google's big war chest and nimbleness in becoming a formidable competitor. Or the PR momentum this horse race will generate.
Bottom line: Google is embarking on a very difficult path, and there's clearly room in the marketplace for multiple winners. But Apple, with its head start and track record of execution, will maintain its long-term leadership and market control. Everyone else is still playing catch-up. Lots will be made of Google's initiatives. But investors will make lots more if they focus on the fundamentals when it comes to digital media ecosystems and platforms. Apple's got 'em. Google is still a wannabe.
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