Google has its own phone and online store now

In an audacious move that could rile its allies in the wireless and retail industries, Google opened an online storefront Tuesday and began selling Google-brand phones directly to consumers.

The first is the Nexus One, a slim touch-screen model running the Android operating system Google has been developing with mobile-phone companies the past two years.

Although the Nexus One has new features, including 3-D graphics and noise-canceling microphones for use in noisy areas, the most radical thing about it is Google's business approach.

With the latest move, Google now competes directly with those mobile-phone companies, while simultaneously encouraging them to use Google software and services.

Anticipating questions about this tactic, Google included two phone manufacturers in its news conference and Webcast on Tuesday at its Mountain View, Calif., headquarters.

Motorola CEO Sanjay Jha demurred when asked if the Nexus One would cannibalize sales of his company's new Droid phone, which runs on Google software, and whether partners should feel threatened by Google's move.

"I don't see it as a threat," he said on the Webcast. "I think this is potentially an expansion of the marketplace."

Google timed its announcement to come just ahead of Microsoft Chief Executive Steve Ballmer's keynote speech this evening at the International Consumer Electronics Show in Las Vegas, where Ballmer may preview a new version of Microsoft's phone platform and mobile services such as search and gaming.

Google executives described the Nexus One as in a new phone category with the capabilities of a circa-2005 laptop.

"The Nexus One belongs in an emerging category of devices we call superphones," said Google's Mario Queiroz, vice president of product development.

Others to follow

It's the first of multiple premium phones Google plans to sell directly through its new online storefront — google.com/phone — which will also be a hub to activate the phones.

Buyers will need to have a Google account, such as a Gmail e-mail account.

The Nexus One will cost $529 or $179 if purchased with a two-year wireless plan costing about $80 per month from Bellevue-based T-Mobile USA.

Other carriers, including Verizon Wireless and Vodafone in Europe, are set to support the phone starting in the spring.

Asked if the Nexus One is an "iPhone killer," Google's Andy Rubin deflected the question.

"I think choice is a really good thing," said Rubin, vice president of engineering and former CEO of Danger, a handset maker acquired by Microsoft.

Rubin said Google isn't trying to make money off the phones as much as the advertising it will deliver. It's basically a handheld Web computer, and Google's business is selling ads viewed on computers.

"This is just the next front of our core business," Rubin said.

Google also sees the phone as "the best possible Google experience," he said.

"When you hit Google.com you're a Google customer," he said. "If you want the best possible experience you'll come to the store, grab the device and the advertising model takes off."

Opening a Web storefront could signal broader plans for Google to enter direct retailing, but executives wouldn't discuss plans beyond selling cutting-edge Android phones on the site.

"We're not going to comment more specifically than this particular point," Queiroz said, looking a bit uncomfortable with the question.

Before showing the phone, Queiroz talked up its partnerships with mobile-phone companies, which are selling 20 of their own Android phones on 59 networks in 48 countries.

The Nexus One, for instance, is made by HTC, a Taiwanese company with U.S. headquarters in Bellevue. CEO, Peter Chou was the other industry representative at Google's event.

Google engineer Eric Tseng said the device is built on a version of Android similar to that running Motorola's Droid, which is sold by Verizon Wireless.

It has largely the same applications as the Droid, including Google Maps' navigation service.

Additional features in the Nexus One include the addition of five homescreen panels for people to customize the phone with additional application icons, or widgets.

Another application new to the Nexus One is "live wallpaper," a videolike dynamic background image that moves and can be manipulated by touching the screen. HTC developed similar 3-D animations for the Hero Android phone sold by Sprint.

Tseng said the phone's powerful processor enables 3-D graphics, such as a zooming effect when launching applications and a photo gallery that can be manipulated with finger-swipe gestures or by tilting the phone.

Speech conversion

The device also accepts voice controls, including speech-to-text conversion that can be used, for instance, to compose e-mails by speaking into the device. It worked, after a few seconds pause, in Tseng's demo.

Also demonstrated was the new Google Earth service for the Android platform.

Rubin said the Nexus One software will be open-sourced and available to other devices within a few days.

Not many phones are yet using the Snapdragon platform, though, so the 3-D graphics could be a challenge until such powerful processors are more widely available.

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com