Google’s worst-kept secret phone finally launched last week.

Despite the fact that details about the phone have been leaked all over the web for months, the Nexus One was officially revealed at a good old fashioned press conference at Google headquarters in Mountain View.

Referred to by Google staff as a *Super Phone*, the Nexus One is already being touted as an iPhone killer and has been designed specifically for Google’s Open Source Android operating system.

At first glance, the Nexus One does look very much like an iPhone. The major difference between the two is the trackball in the Nexus – reminiscent of the IBM ThinkPad. At 11.5mm, it also features a thinner profile than the iPhone, a 5 megapixel camera, 2 microphones (one for noise cancellation), a 3.7″ OLED touch-screen display and it weighs in at a tiny 130 grams.

Comparisons to the HTC Droid Eris phone leaked last month are no coincidence – Taiwanese firm HTC manufactured the Nexus One. Another gloat-worthy, geek-pleasing feature that the Nexus has over the iPhone is the voice-activated keyboard, which I noticed a few launch attendees testing yesterday on Twitter, with amusing results.

Read Danny Sullivan’s live coverage of the launch for more details.

Clearly, Google are throwing a LOT of money at the Nexus project and are very keen to show it off, even installing the world’s largest Nexus One in their foyer. So proud of their new hardware are they that every Google employee was given one of the phones for Xmas, resulting in early buzz via social media.

But don’t be fooled into thinking it’s all about the phone. If you read the official Google blog post, you’ll realize that it’s the launch of Google’s consumer web store that’s the real story. The launch of an online mobile store to sell Nexus One means Google has crossed the threshold from search company to consumer electronics retailer.

Why would they do that? If you look at the global smart phone market, currently Nokia and Research in Motion (makers of the Blackberry) have the dominant share, followed by Apple with the iPhone. In comparison, handsets using Android have a tiny share of the market (source = Gartner) and Google wants to boost that. What better way to achieve this than to launch their own smart phone?

The other big incentive for Google to launch its own hardware is to protect its online advertising business in the mobile computing arena. As more and more people surf the web using their handsets, Google wants to ensure they are the default search engine in those handsets.

However, rumors that Google might offer a pricing structure for their handset partly subsidized by AdWords revenue proved unfounded, disappointing some expectant launch attendees.

In an interview with BBC News following the event, editor of Search Engine Land, Danny Sullivan commented:

“It would have been nice to see them roll out something a bit more unique. Google has speculated in the past that there one day might be phones that are entirely ad-supported and because Google is this huge ad behemoth, this was a natural opportunity to roll out a phone like that.”

US consumers are now able to buy the Nexus One directly from Google’s web store for US$179 with a two-year contract with T-Mobile USA or the unlocked handset for $529, allowing people to use a carrier of their choice. Only available in the US right now, the Nexus One will soon be sold in Europe, Singapore and Hong Kong via Vodafone.

When asked during the launch if the Nexus One was an iPhone killer, Google’s Andy Rubin replied “Choice is a good thing”.

Forget Yahoo and Bing, Google is now targeting Apple.

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