Google’s new Nexus One smart phone serves as a showcase for the latest version of the Android operating system and will allow the company to gather critical user data for developing new software, according to iSuppli.

"With a plethora of smart phones based on the Android operating system already on the market, questions have arisen as to why Google would begin selling its own phone equipped with the operating system," said Tina Teng, iSuppli senior analyst for wireless communications.

"iSuppli believes the Nexus One allows Google to demonstrate all the capabilities of its operating system more effectively than other phones that employ customized versions of Android. The Nexus One also gives Google direct access to end customers, yielding key information on how users interact with applications and utilize data."

Such information will be pivotal as Android-based phones strive to gain market share in the burgeoning smart phone market. iSuppli predicts global smart phone shipments are set to rise considerably, more than doubling from 181 million in 2009 to 439 million in 2013.

According to iSuppli, with Google having directed the entire design of the Nexus One, including the hardware, applications and operating system, the phone exemplifies all the capabilities of version 2.1 of Android.

In contrast, other Android-based phones, such as Motorola’s Droid, have personalized the operating system to suit their own hardware designs and services.

"The Nexus One will help Google popularize Android by showing what the operating system can really do," Teng said.

Beyond serving as a technology demonstrator for Android, the Nexus One gives Google direct access to consumers’ use patterns.

Teng said Google can embed an applet into the Nexus One that can send reports on user behaviors back to a company database for analysis.

iSuppli believes the Nexus One is a compelling device in terms of functions and capabilities. However, the product will still face significant competitive challenges.

"Google will have to bundle innovative software with the Nexus One to combat its strongest competitor: Apple’s iPhone," Teng said.

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