By Staff Writer – John Federico (@gadgetboy)

The news may have broken over the weekend but nonetheless, it continues to spread like wildfire: Google is going to launch an Android-based smartphone some time in January – without the support of a carrier.

This is big news on many fronts.

1. Google will now sell hardware to consumers. That’s a big step for a company whose primary business is internet search, productivity tools and advertising. It will be interesting to see how well they do (or don’t). This is a sesmic shift for the company and interestingly, the inverse of Apple.

No one delivers hardware/software integration in consumer electronics better than Apple but to date, they haven’t been able to get web services right. (See MobileMe.) Google on the other hand, does web services probably better than anyone. Let’s see if they can translate that into their own branded consumer electronics.

To date, they haven’t been truly successful with the Android OS – while it’s very good, it’s still far from Apple’s iPhone OS in usability and polish. And speaking of Apple…

2. Google is increasingly becoming an Apple competitor and this is the biggest step in that direction. It’s one thing to provide an open source OS for smartphones and have ODM’s produce and sell those phones. It’s an entirely different thing to badge and sell your own.

3. Google is trying to do something in the U.S. that has yet to be successful – sell unlocked, unsubsidized smartphones for use on any GSM network (in our case AT&T and T-Mobile).

Why hasn’t this sales strategy worked? Because U.S. consumers see the cost of an unsubsidized phone (in the case of the original iPhone it was $600!) and balk at the price. Instead, consumers opt for a one or two-year agreement with a carrier and get the phone at a (perceived) discount.

In the short time since the Google announcement, there have been blog posts and articles about how this lack of carrier subsidies will kill the Nexus One before it even launches.

All things being equal, I agree.

However, the lack of carrier subsidies won’t mean that there won’t be any subsidies. Google will subsidize the cost of the Nexus One smartphone the way it subsidizes everything – with contextually relevant advertising.

We’ve only just begun to see the integration of Google advertising on Android phones – partly due to their carrier relationships and partly due to the fact that Google has been monitoring the adoption and response to Android from consumers.

They’ve now had multiple opportunities to measure consumer engagement with a variety of Android phones and applications running on the T-Mobile and Verizon Networks and with this in mind, it’s time to unleash the mobile advertising experience.

Where will we start to see ads? Everywhere, in every app.

• Search
• Google Maps
• Google GPS Navigation
• Gmail
• SMS
• Twitter clients

…and so on.

What might the Nexus One cost consumers?

One might assume that the price would have to be at parity with other subsidized smartphones but out of the gate, I believe it will be sold at a slight premium, then possibly discounted over time.

Also keep in mind that in order to have true success, Google will need to find retail partners to sell this phone, which means there will need to be some margin built-in for the retailer.

Even so, the retail channel is not where the bulk of most phones are sold – they’re primarily sold through carriers. If the Nexus One creates buzz among consumers, I wouldn’t be surprised to see AT&T or T-Mobile begin selling it through their own retail channels.

Verizon customers will just have to wait, or get a Droid.

My guess is that the phone will sell somewhere between $249 and $399 and get cheaper over time.

What do you think the cost of the Nexus One will be?

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Tags: advertising , Android OS , Apple iPhone , ATT , Carrier Subsidies , Contextual Advertising , Google Nexus One , GSM , HSDPA , HSPA , iPhone , Mobile Advertising , Nexus One , Nexus One Smartphone , Quad-Band Smartphone , T-Mobile