Google Phone - Nexus One

Google finally announced its own mobile handset yesterday, the Nexus One.

There has been a lot of hype built around this launch and lots of thought into its consequences. Why would Google risk a rare move from software into hardware?

The obvious answer is to break the stranglehold Apple has on the mobile web through its iphone and App store franchise.

But the answer is bigger than that.

Its another move in a carefully constructed plan by Google to retain its leadership as computing shifts from one generation to another. Mobile is a game changer. As people increasingly rely on powerful mobile phones instead of PCs to gain access to the Web, their surfing habits are bound to change. As a result Google's economic model is under threat.

'The new paradigm is mobile computing and mobility. That has the potential to change the economics of the internet business and to redistribute profits yet again' David B. Yoffie, a professor at Harvard Business School.

Now Google saw the threat posed by mobile long ago and are well prepared making shrewd moves before Nexus One. In fact Google have been busier and have invested more than their rivals. Their mobile operating system Android has grown fast and is already beating Microsoft in mobile. They are trying to buy AdMob, the leading mobile ad placement company. They bought Grand Central a smart call handling services company. They've invested in mapping (recognizing services based on location are going to be critical particularly in ad placement).

Yes this is defensive but its also a recognition that mobile is going to be bigger, far bigger than PC and gives them a great place to grow revenues. All in all its the only place for them to be.

As for Nexus One it doesn't look that amazing when compared to iphone but that in itself doesn't matter. The game is much bigger and much more important than that.