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Google looks set to dial up phone competition

December 15, 2009 at 2:59AM
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SAN FRANCISCO - Google Inc. is determined to gain more influence over how the Web is used on mobile phones, even if the next step in the quest tramples some of the relationships forged during its two-year expansion into the wireless industry.

The focus on Google's mobile ambitions is sharpening now that the Internet search leader is working on a new phone called "Nexus One." The handset is being tested by Google's 20,000 employees, who received the device just before the weekend.

Google declined to comment on the reason for the Nexus One's development.

But The Wall Street Journal and The New York Times have described the employee testing as a prelude to selling the phone directly to consumers early next year.

The phone -- manufactured by Taiwan's HTC Corp. -- wouldn't be tied to a specific carrier, unlike other devices using Google's "Android" mobile operating system.

The autonomy of a so-called "unlocked" mobile phone could give consumers more freedom to select the carrier of their choice, although the unique technology running competing U.S. wireless networks will probably limit the options.

It's not clear how wide-ranging Google's ambitions are for the phone. Unless Google is willing to sell the phone at a loss, the Nexus One is likely to be much more expensive than Apple's iPhone and similar devices, which receive subsidies from wireless carriers.

With those subsidies, most "smart" phones sell for $50 to $200, instead of the $400 to $600 price they'd have without the financial aid. The carriers recover their expense through service plans that cost $800 to $1,000 a year.

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