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8 January 2010

Could Google’s Nexus One justify “iPhone killer“ moniker?

Latest handset from Google is most serious contender to date

By Jason Stamper

Nearly every smartphone that has been launched since the Apple iPhone has been accompanied by a flotilla of articles asking the same question: is this new device an “iPhone killer”?

Indeed, a Google search throws up 701,000 instances of the phrase “iPhone killer” on the web. Yet, for all the noise, nothing so far has been a barrier to the growth of Apple’s iPhone: recent smartphone market share figures from Gartner, the analyst firm, show that, if anything, Apple is closing the gap on the smartphone market leaders, Nokia and RIM (maker of the Blackberry).

It’s hardly surprising that the iPhone continues to do well. As I’ve noted before, Apple fans are about the most passionate consumers on the planet. Witness the scene in the first five minutes of the first episode of the new television series Nurse Jackie, in which a bicycle courier with critical injuries sits up in bed just before he dies to tell a doctor using a non-Apple phone: “Doc, you gotta get an iPhone!”

Subtle, perhaps not, but good branding nonetheless. (My bet is that Apple paid for such valuable coverage. But the script is not so contrived, considering the evangelism of many iPhone punters.) Somewhat ironic, too: the actor playing the doctor, Peter Facinelli, is a known iPod nut, whipping it out for people he’s never even met before (his phone, I mean, obviously).

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Anyway, getting back on track, the Taiwanese smartphone maker HTC saw unit growth of almost 61 per cent year-on-year. Which is where this story starts, in a roundabout kind of way, because that growth is coming not only from devices running Windows Mobile, but also from those like the Click, Dragon and Bravo, all of which run Google’s mobile operating system, Android.

Google announced Android back in 2007, with the first devices based on the system shipping in October 2008. There are now over 20 handsets available from various manufacturers that run Android — the likes of HTC, Motorola and Samsung.

Early signs have been good, rather than spectacular. The research firm Canalys has said that Android captured 3.5 per cent of the entire smartphone market within a year of it going on sale. Google, perhaps sensing it needed to give the Android market a bit of a boost, this week launched a new Android-based phone called Nexus One. The key difference, however, is that Nexus One is the first Android-based phone that Google is calling its own. It’s the first real Google mobile, or Goobile (I made that up, and confess it’s unlikely to catch on).

Sure, it’s still manufactured by HTC, and it’s not the first Android-based phone to have the Google logo on the back, either. So what’s changed? This time, Google is putting itself centre-stage. It did the launch not at HTC’s headquarters, as with some previous Android phones, but at its own Mountain View HQ. What’s more, you can buy the Nexus One from Google’s own webstore, making this the first time Google has entered the phone retail space.

So, dare we use the term iPhone killer about the Nexus One? Well, it makes few radical improvements on what the iPhone can do, it’s still not quite as pretty, in my view (and Apple buyers are design-sensitive, to say the least), and it’ll be a while before applications for the device match what’s available for the iPhone (well over 100,000 and counting).

It’s true that Nexus One’s voice-recognition input — which is built in to every text input field on the device, enabling you to answer emails, navigate to a particular place via Google Maps, or (naturally) search Google — is something the iPhone can’t quite manage today. One strong feature won’t put the brakes on iPhone sales, mind.

Perhaps more appealing is the somewhat more open nature of the Nexus One. The iPhone is sold by a relatively limited number of operators on a limited number of price plans, while Google is suggesting that you’ll be able to buy a Nexus One and put pretty much any SIM card in it that you like.

But the more important development is the way Google is playing a more serious role in its own mobile future. Google, remember, makes most of its money from advertisers, which buy advertising around its search-engine results. While in mature markets mobile web browsing is on the increase, it’s growing even faster in emerging economies, where some consumers spend most of their time on the internet on a mobile device, not a PC.

As Erick Teng, Google phone project manager, told CBS News: “What we found is that if you make the website browsing experience better and faster, people do more searches. It’s pretty obvious.” More searches, mobile or otherwise, mean more revenue for Google.

The Nexus One, then, is not an outright iPhone killer. But Google’s increased focus on peddling not just its Android operating system, but its own “Goobiles”, too, is likely to take at least some of the phenomenal growth away from the iPhone. It won’t kill the iPhone dead, but it may knock it from the top of the growth charts.

Last October,analysts at Gartner predicted that by 2012, Android would become the world’s second most popular smartphone platform, behind only the Symbian system, which powers Nokia smartphones. In that sense, Nexus One and subsequent Goobiles are iPhone killers.

But with Gartner predicting that Apple will remain in third place with the iPhone, and Apple making far higher margins on the sale of every iPhone than Google or other operators are said to make from Android-based devices, let’s just say that reports of the iPhone’s death are greatly exaggerated — unlike the sad Apple fan in Nurse Jackie.

Jason Stamper is the New Statesman technology correspondent and editor of Computer Business Review