Google's rumored move to sell its own cellphone directly to consumers carries obvious advantages for the search giant. Not only would Google be able to create exactly the type of phone it wants, it could also experiment with different ways of monetizing mobile search and mobile ads, with no threat of interference from wireless carriers.
Less clear are the benefits for the other company involved in the project: HTC. The Taiwan-based handset maker is the manufacturer of the Nexus One, the latest device to run Google's ( GOOG - news - people ) mobile platform, Android.
As the phone most-closely aligned with Google's mobile ideals--and the only one to run 2.1, the latest version of the Android operating system--the Nexus One appears destined to be the flagship device for all Android phones if it is offered for sale, as rumored (to date, the phone has only been distributed to Google employees for testing).
Observers have described the Nexus One as slimmer than the iPhone with a powerful 1 gigahertz processor, and a sharp, bright touch-screen. Leaked photos indicate that the Nexus One is indeed snazzy looking.
Being associated with the latest, hottest Android device no doubt pleases HTC. Collaborating closely with the search giant on its so-called "official" phone should also give HTC an edge over the other handset makers that are also producing Android phones, such as Motorola ( MOT - news - people ), Samsung and Sony ( SNE - news - people )Ericsson ( ERIC - news - people ).
That's important because while HTC also produces phones based on Microsoft's ( MSFT - news - people ) Windows Mobile software, much of its focus these days is on Android. HTC Chief Executive Peter Chou told Forbes in a late October interview that the company plans to "work with Google for a long time."
Still, there are reasons that landing the Nexus One project may not be wholly to HTC's advantage. The company has admitted that it needs to improve awareness of its brand to increase revenues. In October, it launched a multimillion-dollar marketing campaign to raise its profile worldwide. It also began insisting that its phones carry its logo.
The current version of the Nexus One lacks an HTC logo, however, and the name does not include any reference to HTC. That could change, certainly. HTC has previously supplied internal development phones to Google that came to market under different names.
The other curious aspect of the Nexus One partnership is that HTC has carefully cultivated a reputation for being a phone maker that can improve Android by adding its own software. Its "Sense" overlay, which lets users customize their phone displays and news feeds, is widely credited for making Android more intuitive and useful and generally better looking. Since introducing Sense in June on its Hero phone, HTC has placed it on all its recent releases, including its lower-priced Tattoo, the Droid Eris for Verizon Wireless and its Windows Mobile flagship device, the HD2.
Claude Zellweger, a principal at HTC's design firm, One&Co, told Forbes in September that HTC wants Sense to be the one feature that ties all its products together. "Consumers will think more about Sense than about the underlying operating system [on a particular phone]," said Zellweger. In a recent earnings-related document, HTC championed this type of "proprietary content" as a skill that set it apart from rivals, noting that companies that add "no differentiation" to Android "show less capability."
As a Google-centric phone, Nexus One does not feature Sense.
It may be weeks before the public understands what the Nexus One project entails. Google has declined to comment on its plans outside of a post it made on its blog Dec. 12. HTC would only tell Forbes that the company continues to work closely with Google and is excited about the future of Android.
Until the companies break their silence, people are likely to keep speculating that Nexus One isn't just a gamble for Google; it's also a wager for HTC.