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Google has just introduced a handset called the Nexus One, which is available at Google’s web store with two different pricing systems. It can be bought for $529 (£332) as untied to any network, or $179 (£112) with a T-Mobile contract lasting two years. The handset is expected to compete with iPhone, a well-established handset from Apple.

However, according to Google and some analysts, the aim of the device is to give Google a firm footing in the mobile advertisement market. Google is a search engine that makes most of its revenue from search-related advertising. The current worth of this core business of the company is around £12.4 billion.

However, mobile advertising is the new form of advertising and there is no way Google was going to lose a share in it when it has such a control on online advertising. Danny Sullivan, editor of SearchEngineLand.com, had recently told the BBC that Google had once stated that mobile advertisement would become so huge that the cost of mobile phones would become advertisement supported. In such a case, Google would naturally want a share in the market.

However, Google has not reduced the cost of its handset by using mobile advertisement revenue, as many would have thought. The pricing structure is important and Google has made sure that the handset is not tied to any particular service provider and the users are free to choose whichever service provider they want.

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