The introduction of Google's new phone, the Nexus One, sets up a classical positioning problem (4.6.6 Sensitive Positions). Google's existing position as a software supplier to phone makers is endangered by their advance to a position competing with those same phone makers. In an earlier news item, we discussed how well positioned Google's Android operating system was to become the Windows of portable computing. This move undermines that position.

Google's new venture is a classical strategic error of competing with your supporters. It only works when you can make the complete transition, and, even then, Google is only selling a nameplate, since HTC is doing the manufacturing. It also move Google from the profitable software business into the treacherous hardware business. While their profits can certainly support this move, the biggest benefactor is Microsoft, who understand that a software company can not directly compete with existing hardware customers. That is why we have an X-BOX but not Microsoft PC.

This decision was almost certainly a product of impatience. Google saw how slow existing phone providers were at adopting and updating new operating systems and wanted to get Android out there faster. Perhaps Google sees their slowness as an opportunity, but everything looks easier from a distance.