The craziest and most unlikely of those rumors has now been confirmed by Google.
A full-page ad appearing in the national papers this week says, "The first smartphone designed, engineered and assembled in the USA is coming" and that it will be "the first smartphone that you can design yourself."
How will you design your own smartphone? And why would Google let you do this?
The commoditization wars
Steve Jobs' "thermonuclear" war against Google has devolved into a war of commoditization.
Commoditization is the process by which products become indistinguishable by their features in the eyes of consumers. For example, heating oil would be a perfect commodity — consumers don't shop around to find the attributes and qualities for heating oil that they prefer. They just buy heating oil. It's all the same.
De-commoditization then is the process of taking something that's a commodity and giving it attributes that consumers might prefer. For example, in the last 40 years, coffee has been largely de-commoditized. It used to just be coffee and it came in a can. Now, people go looking for organic, fair trade, espresso-roasted coffee beans from Kenya's Kirimara Estate.
Apple sells hardware and software. To Apple, services are free things they offer to support the sale of their hardware and software. So Apple wants to de-commoditize hardware and software and commoditize services.
That's why Apple is always suing everybody — by keeping other companies from designing hardware and software that consumers might believe is the same as Apple's, the company can emphasize the unique design elements.
That's also why Apple's upcoming iOS 7 looks and feels so different. Just being different is an important attribute when you're trying to sell a non-commodity user interface.
Similarly, Apple is keen to match many of the functions of Google Now. Apple's message is: Oh, sure, we do that, too. No big deal — these kinds of virtual assistant features are a commodity, and therefore have little value.
Google, on the other hand, is a services company that makes hardware and software to support its services. So Google wants to make services less commoditized and hardware and software more commoditized.
In Google's world view, Google Search, Gmail, Google+, Google Now, Docs and all the rest working together are unique, special and valuable. The software that runs them and the hardware that they run on are just commodities.
In reality, however, that's not true at all. Hardware and software are not commodities. Android tablet and handset makers work hard to de-commoditize these things through hardware and materials design and software interface innovation.
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