T-Mobile USA, the US wireless unit of Deutsche Telekom (DT), is set to kick-start the new year by offering Google’s (GOOG) much-anticipated Nexus One (a.k.a “Google phone”) Android phone. Manufactured by the Taiwanese handset vendor HTC, Nexus One is Google’s own branded Android smartphone and represents one of the high profile smartphones lined up for 2010.

Google is expected to begin selling its Nexus One directly from its website starting Jan 5, 2010, for an unsubsidized price of $530. The buyers will have the opportunity to select their preferred wireless carrier. Alternatively, the device will be available at a subsidized price of $180 under a two-year service contract with T-mobile USA.

Android-based mobile phones have generated significant buzz in the US smartphone industry. T-mobile USA currently markets G1 and myTouch 3G that runs on Google’s revolutionary open-source Android software platform. Android smartphones are also being marketed in the US by Verizon (VZ) and Sprint (S).

Nexus One has been designed to run an array of Google applications including the Internet calling service “Google Voice,” software applications (such as “Google Books”) and a premium YouTube service. Leveraging the fast-growing mobile Internet market, Nexus One offers the users access to the Web through voice commands.

T-Mobile USA is the fourth largest mobile operator in the US with 33.4 million subscribers. However, the company is facing a consolidating industry. Verizon has emerged as the largest wireless carrier in the US following its acquisition of Alltel Corp while AT&T (T) recently acquired regional telecom operator Centennial Communications.

Due to their size and scale of operations, T-Mobile USA’s larger competitors are able to deliver cost-effective services, which are affecting the company’s position in the market. Higher contract churn is affecting customer retention as T-mobile USA lost 77,000 customers in third-quarter 2009.

Nexus One is being positioned to directly compete with Apple’s (AAPL) iPhone, which exclusively runs on AT&T’s network in the US. Moreover, the feature-rich Android device will challenge Motorola’s (MOT) Droid Android phone (marketed by Verizon in the US) and the latest Windows-based smartphones.

While Nexus One is expected to reignite aggressive competition in the US smartphone space, it will offer T-mobile USA an opportunity to improve customer retention. The device will effectively complement the company’s new HSPA 7.2 standard based 3G network. While the current version of Nexus One only supports T-mobile USA’s network, Google may launch a second version of the device with support for AT&T’s 3G network.

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