Google CEO Schmidt Shows NFC on Android 2.3 Nexus S

SAN FRANCISCO—Google CEO Eric Schmidt showed off an unnamed Android 2.3-based device believed to be the Nexus S, and said Android phone owners will soon be able to use the device as a credit card to make purchases.

Shortly after taking the stage at the Web 2.0 Summit here, Schmidt pulled a smartphone from his pocket and said he happened to have an "unannounced product that I carry around with me."

The black smartphone with rounded edges appeared to be the Nexus S tech blogs have been reporting on for several weeks. However, Google taped over the brand names of the device, which is believed to be have been made by Samsung.

The phone is certainly running on T-Mobile, according to the pictures Engadget captured here. Also, Android 2.3 is due in the "next few week," Schmidt confirmed.

Schmidt's demo wasn't the phone itself but the new Android 2.3 software on it that he said leveraged a chip for near field communications (NFC), an emerging wireless technology that lets devices exchange data over short distances.

NFC, which companies such as Apple and Square are also working with, will be native on Gingerbread, though Google expects startups to develop mobile applications for the open-source Android operating system that leverage NFC.

An application could let a user pay for goods by tapping the phone, equipped with an embedded chip, on a point-of-sale terminal in a store. 

"The theory of the case is that you'll be able to take these mobile devices from everybody, and you'll be able to walk into a store and do commerce and be able to figure out where you are, again with your permission," Schmidt said. "It could eventually literally replace your credit card."

Schmidt argued that NFC is extremely secure and that the tap and pay method is highly coveted by the financial services industry, which sees the value in the technology for preventing loss.

NFC uses a higher level of authentication and identity than a traditional magnetic stripe on a credit card, which is why credit card companies like it, Schmidt said. "They have a big interest in building out that infrastructure just to deal with their fraud loss rates."  

The CEO also reiterated the possibility of NFC augmenting Google's serendipitous or autonomous search effort to target mobile phone users with search results and push notifications based on the users' search history.

"Imagine I'm walking down the street and instead of typing my search, my phone is giving me information all of the time," Schmidt said. He envisions several links between autonomous search and users' location, provided they opt in.

A user may receive a notification about a pair of pants that are on sale in a local store. The consumers can go into the store and buy the pants, using the NFC chip and Android 2.3 software to accelerate the payment process.

Google is taking other steps in mobile commerce. The company Nov. 15 upgraded Google Product Search and the Google Shopper for Android application, allowing users to find products online and locate nearby stores that carry the merchandise.