I don't know if it's been linked to yet, but the WSJ
is saying that Google will directly sell a Google branded phone, made by HTC, unlocked and without a contract. The Nexus One.
Which means, just off the top of my head:
--Either Google will have to lose money on each handset or sell it for quite a bit more than people are used to paying. Yes, I know subsidization is a false economy, but the average consumer is unlikely to see it that way, especially if they still have to pay the same amount on their monthly bill. The upside of not being under contract isn't a huge selling point, IMO, for most folk.
-- Google will now have its Zune moment, where it is suddenly in competition with its hardware partners. If the Nexus One is a huge success, that's a pretty big problem, if it's not, it's just status quo, so I'm not sure what the upside for Google is. Maybe they just want to get a reference platform out there, but it's a pretty risky way of doing it.
-- And, If Google really wants the Nexus One to be a huge success, they need to make it better than the competition, which includes those very hardware partners. Since they wrote the OS, any improvements they make will be regarded as improvements to the OS that they are withholding from those partners. If they don't withhold such improvements, then the Nexus One won't really have any way of distinguishing itself from other Android handsets. To the extent that improvements are a matter of integration with the HTC hardware, HTC has motivation to copy any such integration, again negating any competitive advantage. I don't see a good way out of this bind.
When MS decided to dump "Plays for Sure" and make the Zune, they made something new that none of their partners had. Google can't do that. Not sure how this plays out.