Google's Nexus One-Potential Game Changer or Possible Flop (GOOG)
12/14/2009-Google (NASDAQ:GOOG) has confirmed recent rumors of its heavily anticipated cell phone, the Nexus One, and the Wall Street Journal has reported that it will be sold directly to consumers at the beginning of next year.
On Saturday, Google announced through its mobile blog that it was testing a new mobile touch screen device that is HTC-built and runs the latest version of the Android operating system.
Early reports from Google beta testers have been upbeat about the handset's ability and sleek design. However, the pivotal part to this story was that the phone would be sold unlocked, which enables customers to use whichever carrier they desire.
Barclays issued a note to clients regarding the news early Monday morning. According to analyst Jeff Kvaal, launching a device without a carrier partner may actually limit their initial success in the market.
However, on a long-term basis Barclays Equity Research says they "believe a Google phone introduction would represent a negative for all handset vendors and Motorola in particular as Google has both the brand and resources to aggressively support its initiative."
Barclays concluded with the following;
"We believe the launch of the Google phone is likely to be a negative for all handset vendors. Given that the Android platform is owned by Google, we believe it does raise conflict of interest issues with its customers. Google has gifted Motorola with the latest version of Android 2.1. In our view, one would have to assume Google would be heavily incented to ensure its own devices got the operating system at the same time should it also offer a phone. We believe Motorola in particular will be the most impacted as their entire smartphone roadmap is based on the Android operating system. While other device manufacturers have alternatives, Motorola does appear to be binded to the platform at least through 2010. We consider Motorola's allusions to Windows Mobile 7 - due this summer - to have been only half hearted."
by Chip Brian