Bar none the Nexus One (made by HTC but branded Google) is the best Android handset on the market. It ends Droid's claims about speed and power. I had a chance to play with it last week for about five minutes. Here were my quick takeaways:

• It looked to me like a thinner Droid Eris with a larger, more impressive screen (both are made by HTC; Nexus One has no “Sense” interface)
• The screen resolution was great and crisp
• The stand-out dimension of the phone iwas its speed; it was extremely fast (running on the T-Mobile network)
• It features the “new” version of the Android Market, which is a considerable step up from what exists now
• A surprise and disappointment: no multi-touch

Here's more from Gizmodo after its "hands-on." Engadget asserts there will be an "invitation only" sale starting January 5 (think GMail, G Wave rollouts) with broader availability sometime thereafter, including directly from T-Mobile. 

While I still don't believe this bests the iPhone holistically -- although it does in terms of speed -- this is a compelling device. In fact it's more compelling than any of the other Android handsets being sold by Google's partners. Verizon has built interest in the "Android brand" with its massive "Droid" marketing campaign. Now Google comes along and puts out a better phone that will benefit from Verizon's marketing spend and related brand buzz it's created.

I don't know what the price will be -- a key variable here -- but I heard a rumor that it would be $99 with a two-year T-Mobile contract (some arrangement between Google and T-Mobile has been made to subsidize the device). If that price is correct it will be a big hit, capital "H." It won't work in the US on Verizon or Sprint's networks because its appears to be a GSM only device.

For now Droid is safe at Verizon. But people who were buying the phone because they were getting something cutting edge will now have to deal with "second best." What exactly is Google doing, risking alienating its partners and Motorola in particular, here? It's not clear if this is arrogance, shrewdness or simply a myopic emphasis on building the best Android device possible. 

Google has a history of competing with partners because it's focused on building the best consumer experiences it thinks it can. We'll know at the end of next year answers to the following:

• Whether this device elevates Android to iPhone and RIM-like status
• Whether it has sold well in the US and abroad
• Whether Google's partners have moved away or become less enthusiastic about Android the OS because of this directly competitive move
• Whether Nexus One turns out to be just another Android handset, among many

Here's a video walk-through of the user experience of the Nexus One:

See related: Android's 'Campbell Soup' Strategy