Verizon, Vodafone dent Google's Nexus One hopes

The Nexus One might have been a bridge too far for Google.

There's perhaps no other project as important as mobile computing at Google, save of course the need to preserve Internet search dominance. But Google's mobile ambitions took a hit Monday as two key parts of its Nexus One strategy failed to come to pass.

First off, Vodafone announced it will be the sole point of sale for a locked Nexus One phone in the U.K., bypassing the Web store that was heart of the Nexus One initiative. That means in the U.K., Google will roll out the exact same strategy it railed against during its Nexus One launch event: a locked phone tied to an exclusive carrier sold only in a retail store.

And perhaps more damaging to its interests at home in the U.S., Google has backed off plans to sell a version of the Nexus One for Verizon's network despite the 90 million customers that would have had access to Google's supposedly game-changing "superphone." If Google really wanted shoppers to embrace the Nexus One, it would have needed to make a version compatible with the most widely used network in the U.S. operated by a companyit viewed as a key partner six months ago.

Google declined to make executives available to discuss the impact of the Verizon and Vodafone announcements. But it's now safe to call the Nexus One a flop.

No matter how many units it has sold (Google refuses to say but analysts estimate less than 500,000 units), Google's main goal with the Nexus One was to change the way the smartphone industry operates. Instead, it's taking a very traditional path in bringing the phone to market.

Google faced a dilemma once it followed through on plans to launch the Nexus One: promote the Web-only store for phones and risk alienating Android partners by undermining their business models or promote the growth of Android and become a more traditional smartphone software company that toes the wireless industry line.

Android is a real success story for Google. Since it was announced in late 2007, Android has turned into a true competitor to the iPhone and given phone companies like Motorola new life with sophisticated modern software that they can tailor to their own needs.

So why would Google have even thought about messing with success? It's true that the Nexus One, when it launched, was a very nice Android smartphone that raised the bar for that category, but it took HTC, who also designed the Nexus One, just a few months to equal or surpass it with a phone like the Incredible, which is now Verizon's flagship Android phone.

It's hard for Google's Android partners to think of the Nexus One as anything but competition. After all, it was their livelihood that Google wanted to disrupt with the Web store strategy, and it's not like Verizon or Motorola was going to retaliate by plunging into Web search.

It seems the Nexus One was a reflection of two things essentially Google: an unquenchable thirst for innovation and an inherent belief that the company's engineers can do things better than anyone else can do them. For the most part this has served Google well, creating an economic engine in Web search and fueling relatively successful expansion into e-mail, Web office documents, mobile operating systems, Web browsers, and perhaps personal computers if Chrome OS comes to pass.

But Monday's developments show that outside forces can put a heavy check on Google's ambition. As if that wasn't enough, Samsung announced a deal to install Yahoo search on its Android phones and Motorola also announced Monday that it is replacing Google's location-based service offering on its upcoming Android phones with one powered by Skyhook Wireless, a company that uses a combination of GPS and Wi-Fi hot spots to get a fix on location.

Motorola still plans to use existing Google location applications, such as Google Maps Navigation, on its phones. But it will be using Skyhook's technology instead of Google's technology to get the actual location of the phone. Up until this point, Motorola had been a key Android partner, even showing up at the Nexus One launch in an attempt to prove that Android partners were on board with that initiative.

Where does Google's mobile strategy go from here? Clearly, Android is here to stay and momentum continues to grow around Android devices as more and more applications get added to the Android Market and partners and carriers continue to produce well-received devices.

However, it seems Google might be learning its limits. This does not appear to be a temporary setback, as Google said rather bluntly in its formal statement that "we won't be selling a Nexus One with Verizon" rather than saying something like "our plans to bring the Nexus One to Verizon have been put on hold." Likewise, Google representatives refused to comment on when U.K. customers might be able to purchase Nexus Ones directly from Google, saying "we don't have any news on the Web store in Europe today."

The Nexus One has been an expensive distraction for the Android community, creating distrust over Google's motives among the very partners it needs to prevent Apple from taking over the mobile world with a philosophical approach to mobile computing that is abhorrent to many inside Google.

It can't reach that goal if its "revolutionary" approach to mobile phone sales is pretty much the same approach as the status quo. If Google really wants consumers to rise up and free themselves from two-year contracts and carrier exclusivity deals for "hero" phones, it's going to have to give them something different.

Or it can settle for the original goal of its Android strategy: to bring sophisticated mobile computing to more and more people around the world, thereby increasing the number of people on the Internet who will need to search for information. Had Google never launched the Nexus One, Google's mobile efforts would be an unquestioned success.

Stephen Shankland and Maggie Reardon contributed to this report.