Google has introduced the Nexus One and no matter what you think of the current hardware (HTC) and software (Android 2.1), the ground around the mobile business is starting to shake. The reason? The combination of unlocked service and open source software.

First, unlocked service. I was hoping that we would see a more innovative pricing move by Google during their launch. Didn’t happen. So at this point the price for an unlocked phone is $529. Seems high given that you’ll still need a data plan, and today most service providers will subsidize your phone purchase if you go with theirs. But the game is barely started, so we’ll have to wait. Seems to me that we will inevitably wind up in a world in which the price of an unlocked smart phone approaches the subsidized price of the handset manufacturers. How to get there? Handset manufacturer competition, with a little help from their friends (sort of like the PC business today). And when we get close to that – why not have the freedom to switch your service provider whenever you want to? Then we start to see pretty fierce new completion to keep your business – with unexpected twists and turns.

Google chose Apache 2.0 as the license for Android. Apache 2.0 is a non-restrictive license, and I can see why they did it. They wanted a license that handset manufacturers could deal with easily, and therefore move quickly, and Google was willing to accept the possibility of some fragmentation of the software stack by the handset manufacturers as a result. Maybe they have other ways (OHA?) to insure consistency. In any case, the stampede is underway and according to press reports we can expect to see a ton of Android-based handsets in 2010. My bet for the dark horse is Dell.

Android apps are written in Java (although it appears that Google has developed their own cleanroom JVM) so they’ve done the right thing in terms of giving developers a way to write apps that can run across all of the various devices. Thanks Sun… So we have the healthy situation of many hardware suppliers and a way for developers to reach them efficiently. It’s the open source element that will make things more interesting – in at least two ways. First, the full stack is open source, so if you are inclined to turn a hardware device into something that only slightly resembles a phone, you can. Its quite possible that we could see alternative open source stacks emerge that change the behavior of the device substantially. Think about Asterisk http://www.asterisk.org/ turning a PC into a PBX for example. Put a phone in a weatherproof box with power, and get a surveillance camera.

But it still requires a way to distribute the apps. Apple has done an incredible job of building their App Store, but their model won’t hold in an open source world, and it won’t be long before there are independent app stores for Android (Sourceforge?) But, given that Google’s app store is likely to be well organized and run, why would developers go elsewhere? Price for one thing. And second to distribute apps that use modifications that are not supported in the official Android release. Some issues remain, but they won’t last long.

All of the above makes it seem likely that the innovation in the mobile space is set to explode, and we’ll all have alternatives on both the service and the applications that change the way we think about using wireless devices.