It looks like Google will be entering the mobile handset market early next year with its phone named Nexus One.

Reports suggest that initially, as early as January of 2010, Google will be selling unsubsidized unlocked phones to the public. They won’t be affiliated to any specific carrier and will be compatible with GSM carriers like AT&T and T-Mobile. As mobile internet usage has gone up significantly in the recent past Google seems to recognize this trend and the phone seems to be its first move to cement its position in the mobile market.

Google plans to sell the Nexus One online. Most phones sold in the US tend to be carrier subsidized. However outside the US it’s the norm for unlocked phones to be sold independent of the carrier. How Google will price its product in different countries is still unknown.

Google has been trying to break the hold of mobile carriers on the mobile market, and with recent acquisitions like Gizmo5, they seem to be ready with a new strategy. They can set themselves up to offer subsidized and inexpensive services directly to the consumers using a product like Google Voice. In exchange for advertising, they could offer services that cost a fraction as much as charged by carriers presently.

The growth of mobile search revenue by 30% this year looks like the key reason why Google is looking to strengthen its mobile presence. Apple’s contribution to this increase was pivotal, and this also seems to make the company nervous. They do not want to rely on an outside company to control a major component of its revenue.

Analysts have expressed some concerns about Google’s move into the handset market. Currently, the only presence Google has in the mobile market is through the Android phones made by third parties and the iPhone which supports Google. With the company deciding to enter into the handset market, it stands the risk of alienating their current handset partners.

Google had spent the most of last year teaming up with carriers and handset makers to release its Android OS. As of now, nine phones and 32 carriers have partnered with Google. It looks like Google’s phone will likely upset a handful of their partners.

This also seems to bring to the forefront the growing battle between Apple and Google. Previously thought of to be working together against a common competitor, Microsoft, this move seems looks like the beginning of stiff competition among the two companies.

For example, the Droid, Motorola’s phone with the Android OS offers turn by turn navigation as a standard free app on its phone. The iPhone on the other hand offers an app from TomTom which costs $99.

As we continuously see the search engine market shake things up tremendously, the consumer seems to be getting better and better options. If Google’s phone ends up being the phone the public really wants, then whatever is said about the negative repercussions could be history. And finally Apple might see it’s worthy competitor.