Reports suggest that Google will partner with phone maker HTC to deliver the much hyped and awaited Google phone; the gPhone as some like to call it.  The Google branded phone is rumored to be out in early 2010 with advertising starting in January.

As PC World’s Ian Paul suggests, the driver behind a Google branded phone is to “own the customer experience” through the gPhone.  While this makes complete sense for Google, what does it mean for Android, and more importantly, handset manufacturers building  Android-based devices?

First, let’s consider whether Google would use Android improvements required for the gPhone as a competitive differentiator versus other Android handset makers.  The Android license doesn’t require derivative works to be contributed back. However, I’ll give “don’t be evil” Google the benefit of the doubt and assume that they will contribute Android improvements back to the Android community. In this respect, the gPhone helps the Android community.

Next, let’s look at brand.  Until now, Android-based handset manufactures have been able to trade on the Google brand.  Competing against the Google brand will be altogether different.  Matt Asay nails it when he concludes that Android is winning over Symbian because of Google’s brand.  Taken one step further, would a consumer purchase a Google gPhone over a similarly featured and priced Android-based phone from Motorola, LG or others?  I would.  Would a consumer pay more for a Google branded phone over, say the Motorola DROID? Yes, that’s why Google’s brand is the seventh highest valued brand according to BusinessWeek/Interbrand.

Finally, can Google actually design and manufacture a superior device versus Motorola, LG and other handset vendor?  That remains to be seen.  Google can hire experienced designers and work with manufacturers such as HTC.  Google expertise in creating compelling, yet easy to use, user experiences could be the competitive differentiator here.  If Google can come up with an innovative way to interact with the gPhone, akin to the iPhone’s “pinch to zoom out” or “flick to scroll”, then the gPhone starts to be real interesting.  These innovative interactions will require API support inside of Android and new hardware designs.  The former may be available to all Android handset vendors, while the latter would not, thereby providing Google another point of competitive differentiation.

In some respects the gPhone, which Google has insisted it had no interest in building, is a kick in the shins, or higher up, to Android handset makers.  Google, friend and foe at once seems like a common trend these days.

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