Wharton - Will Google's Nexus One Change the Wireless Industry?

[wharton] On January 5, Google launched the Nexus One -- the company's new "superphone" -- with a good deal of fanfare. At a press event, Google executives showed off the sleek device, based on the search firm's own Android operating system with integrated services such as Google Earth, an online map and satellite image tool. Google's software, combined with a speedy processor, represent a new category of phones "as powerful as your laptop computer of three to four years ago," said Andy Rubin, Google's vice president of engineering, in a statement. The phone also includes voice recognition technology for speaking text messages and emails, and touts a 3-D interface, among other features that had the tech world buzzing before the launch event.

Although the launch itself was quickly overshadowed by the online giant's surprise showdown with China over censorship, the company's attempt to rewrite the rules of the wireless industry has not gone unnoticed. Google unveiled its own online store to sell the phone independently from wireless service providers that operate as device gatekeepers under the traditional sales model. The goal: Break down distribution barriers and sell the Nexus One directly to consumers. Through Google's web store, consumers can buy the Nexus One unlocked -- separate from carrier service -- for $529. For $179, the Nexus One can be purchased with a two-year contract from T-Mobile. Google announced it would offer more devices through its web store in the future.

The honeymoon didn't last long, however. Google quickly encountered a deluge of customer service complaints about everything from wireless network coverage, buggy touchscreens that wouldn't allow customers to type, batteries that didn't hold a charge and high fees associated with returns. These problems were compounded by the fact that customers could only communicate with the company through online forums and email -- not live customer service agents.

Will Google's Nexus One Change the Wireless Industry?