Google developers got a peek at a Project Ara prototype on Thursday, an early look at the modular phone project Google initially announced in February.

Paul Eremenko, the head of Project Ara, said that the prototype was "tethered to a laboratory bench" a few weeks ago, but the team has since removed that tether to test the phone's features.

When Eremenko brought the prototype on stage during a breakout session of Google I/O at San Francisco's Moscone Center and flashed the Android bootup screen, the audience went wild. Ultimately, the phone failed to fully load (though the crowd cheered anyway), and Eremenko said plenty of challenges lie ahead for Ara, including the challenge of building the tech into a beautiful design for consumers.

The Project Ara prototype.

"The [design] must overcome the connotations of boxiness and brick-like that people associate with modularity," he said. Google is working with New Deal Design to handle the challenge; Eremenko said he wants the phone to be smooth and sleek, but also wants to celebrate — not conceal — its modularity.

Google's prototype is clearly a long way off, design-wise. It appeared to be both boxy and brick-like, although previous design previews are a lot nicer.

The Project Ara prototype.

Google isn't keeping the phone's design in-house. Eremenko also announced Project Ara's first developer prize competition on Thursday. Interested teams must submit a working module to Google by Sept. 1, and the winning team will take home a $100,000 prize.

Eremenko says that this is just the first in a series of developer competitions surrounding Ara, although he didn't share more details about future competitions.