G1 Phone a Stocking Stuffer for Googlers

If cash is king, Google employees may be feeling a bit less royal this holiday season. The search giant eschewed its usual holiday gift of cash to full-time staffers in favor of a new “Dream” phone, the same handset sold by T-Mobile as the G1 that’s based on Google’s Android software.

But a knowledgeable source inside the company was quick to dismiss a report that Google (NASDAQ: GOOG) had given out the phones in favor of bonuses as high as $20,000 to $30,000 per employee. That range was cited by the gossip site Valleywag, which led its article with “Groans are issuing from the Googleplex over this year’s holiday bonus.”

A letter to employees that came with the phones said in part, “The holiday bonus is a Google tradition – it’s a great way to thank everyone for their hard work. In the past, we’ve done this in cash. This year, we’ve decided to give Googlers a different kind of present – a Dream phone (this is the same device T-Mobile markets as the G1).”

The Google source said Valleywag may have mixed up the holiday bonus, which was typically a small amount of cash, with performance bonuses that usually come in January. “Performance bonuses are given in January and are not a small amount,” he said.

The gift phones do not have SIM cards. Rather, they are unlocked, which means the employees can pick a network provider but of course pay for their own phone and data plan. The devices also connect to Wi-Fi networks.

Google’s letter said the phones were to be distributed to almost 85 percent of its global workforce. For legal reasons, Google said the phones could not be distributed in a number of countries where employees would receive the cash equivalent (about $400) of the device.

That figure is a bit more than twice the cost of the commercial T-Mobile G1 model, which is tied to the service provider.

A more conservative choice

The letter to employees also details Google’s reasons for switching from cash to, um, the cachet of owning the latest mobile gadget:

“First, we’ve never developed anything like the Android software before and this represented a unique opportunity to celebrate that achievement. Googlers globally have been asking for the Dream phone and we’re looking forward to seeing all the different things that you do with them. This is a chance for us to once again dog food a product and make it even better! Second, as we discussed in our email this week, the current economic crisis requires us to be more conservative about how we spend our money. We felt that giving the Dream phone would be a great holiday present – something we could all celebrate.”

The phrase “eating our own dog food” was made famous by Microsoft (NASDAQ: MSFT), but has been used by many other companies to describe using the products a company sells. When asked if his company was eating its own dog food related to a new release, an HP official once quipped, “We prefer to say we drink our own champagne.”

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