Google raises stakes in mobile market with 'Nexus One, a phone designed by its own engineers By Michael Liedtke, AP Technology Writer

MOUNTAIN VIEW, Calif. (AP) -- It's official: Google Inc. will sell its own mobile phone in an effort to protect its online advertising empire as people increasingly surf the Web on handsets instead of personal computers.

The phone announced Tuesday had been widely anticipated since Google handed out the device, called the Nexus One, to its own employees three weeks ago.

Consumers will be able to buy the Nexus One for $179 if they commit to a two-year service contract with T-Mobile USA. The phone is going on sale Tuesday online.

Google also will offer versions of the Nexus One that will give people the option of selecting the wireless networks of other major carriers. That's a departure from the way most mobile phones have been sold in the U.S.

The price of these so-called "unlocked" phones will be $529.

Verizon Wireless in the U.S. and Vodafone in Europe will begin offering subsidies on the Nexus One this spring, according to Google executives.

The Nexus One escalates Google's budding rivalry with former Silicon Valley ally, Apple Inc., which has sold more than 30 million iPhones in the past 2 1/2 years. Apple announced a deal Tuesday to buy mobile advertising service Quattro Wireless to counter Google's proposed $750 acquisition of Quattro rival AdMob.