On the eve of the International Consumer Electronics Show (CES), online giant Google unveiled its own branded smartphone—the Nexus One—throwing its considerable influence and financial heft into a heated battle with Apple and its iPhone. Previously, Google had provided only the smartphone OS, Android, and some design ideas to third parties, which would create and sell the phones themselves. But now Google is directly involved and will sell the Nexus One to customers from its website.

The phone, which currently runs only on the T-Mobile wireless network but will soon be opened up to Verizon Wireless and other carriers, costs $179 with a two-year data contract. Alternatively, you can purchase the Nexus One sans wireless plan for $529. (This version also works only on T-Mobile for now.)

Like other Android devices, the Nexus One features GPS capabilities, stereo Bluetooth, a touch screen, and all of the typical accoutrements that one expects from a modern smartphone. What sets the Nexus One apart are some interesting hardware advances—a scroll ball that does double duty as a light-emitting notification, for example—and new software, such as a voice-dictation feature that lets you speak email, Facebook posts, and other activities normally associated with text input.

It's an impressive machine in that it's the most powerful and elegant Android-based smartphone yet. But it's also not a huge leap beyond existing devices such as the Verizon Droid and Droid Eris. According to Google, all the unique software innovations in the Nexus One will be made available for free to existing Android handsets because the OS is open source and extensible.

With the Nexus One, Android (and thus Google) does appear to leapfrog the iPhone in many areas, although it still falls a bit short in two important ways. Android still doesn't natively support multitouch, though Google says it's adding that feature. And the iPhone's App Store, with more than 100,000 applications—many not related to farting, I'm told—is still superior to Google's, which currently offers between 10,000 and 20,000 apps. Google expects to close the gap there as well.

Google's decision to sell the Nexus One itself is interesting and could cast a dim light on other Android designs, especially the recently released and highly successful Verizon Droid, which—until Tuesday—was the Android darling of the moment. But with Google selling its own Android design, it's unclear why anyone would purchase a competing device. Google says there's room for different form factors and designs, and it points to the 30 different Android devices now being offered around the world as proof. All of these, of course, shipped before the Nexus One, however.