Google moves on from Nexus One with new mobile launch

Google is to make its second foray into the mobile handset business, just months after pulling online distribution of its maiden device following disappointing sales.

The search engine giant will launch the Nexus S smartphone, made by Samsung, in Britain and the US later this month. It will be sold at Carphone Warehouse, as Google looks to have fixed the online distribution issues that dragged on sales of its original device.

Shaun Collins, the managing director of CCS Insight, said: "The original business model didn't work because Google couldn't cope with the physical demands of distribution; it wasn't about the quality of the product."

Google's chief executive Eric Schmidt has stressed the importance of mobile to the search engine giant. Its Android operating system is a major smartphone platform and features in many competing handsets. It has now cornered 23.5 per cent of the US market, close behind Apple's iOS system.

It launched its first proper own-brand "Google phone", the Nexus One, in January but announced in July it was to close its online store as it had not met expectations. Dave Burke, engineering manager at Google, said the internet-only distribution model was a big challenge to the Nexus One. "Users want to get their hands on the devices," he said. The Nexus S, which runs the new version of Android, called Gingerbread, will be available SIM-free from £549.99 or free with a £35-a-month contract. Mr Burke called the device the "next generation" of the Nexus, adding: "There is lots of new hardware and software." A source at one of the operators Google bypassed with its first release said the company had learnt from the original launch, which had been "a bit of a disaster".

Mr Burke said the aim was not to be a major hardware player but "demonstrate what can be done, push the ecosystem forward and try new things".

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