Beyond the Google Phone hype, it comes down to: be cheap enough or die

This is what Nexus One looks like… just like an HTC Passion

You have probably noticed in the past couple of days that the hype surrounding the network-free Google Nexus One phone has almost reached its climax. I say “almost” because Google has yet to officially reveal images of the phone that employees describe using words like “iPhone” and “Steroids” in the same sentence. The WSJ says that despite using Android, the ‘experience’ will be different (read: better) than current Android phones. “how different” is unknown but the question is: what good does such a phone do for you, me and Google?

Given that “Wireless Carrier” is the most hated profession after lawyers and car dealers, it’s fair to assume that there mere fact that Google seems to go remotely against them makes the company some sort of super-hero. It’s very good for Google’s image. In theory, it would let you and I get a cool phone without being tied to a contract or to a network (most phones have to be unlocked to work on a different carrier network). Sounds great huh? But, wait, we had that option for years, so why don’t we all buy a Freedom Phone?

Let me guess… because we really like the carrier subsidy that brings a $600 phone down to $200 or so. I hate to deflate the hype, but an unlocked GSM phone would effectively work only with T-Mobile or AT&T, if you look at major U.S networks (although the HTC Passion that looks just like the Nexus One is rumored to arrive at Verizon this month). That’s still not much choice. Also, you still have to pay for the plan like everybody else, so if you are already with AT&T or T-Mobile, is everything so different now? There’s no point in paying the full price, unless the phone is so much better that you would want to pay hundreds of dollars more. Most carrier charge “only” $200 for breaking the multi-year contract.

So, it comes down to price: no-one wants to be locked to a carrier network, but the reality is that people have learned to deal with it and it’s still the cheapest solution for most. Google Voice helps more than anything else to be carrier-free by the way. The only way to get a mass exodus from carrier subsidies and network lock is to provide a phone that is as compelling as the best offerings (Droid, iPhone, HD2) at a price close enough to a carrier subsidy, let’s say $250 to $299 for an unlocked phone (or less!). The room to maneuver is slim, but given that the iPhone 3GS has a bill of material (BoM) of $180, it’s not completely impossible, but remember that there are more costs than just the BoM. Google could also simply take a loss like console makers do, although it’s hard to make the money back by selling services – everything they do is free or ad-supported.

On the technical side, I expect Google to come out with a good hardware platform. At worst, it’ll be a little better than the Droid, at best, it will be much faster (SnapDragon) with a 3.7″ OLED display. As far as the user experience is concerned, despite the hype, Android is simply still behind the iPhone, although the difference is becoming marginal and will soon be irrelevant. I would say that the mapping and reactivity are the main points that I would focus on.

From an operating system’s point of view, Android did solve one critical problem that explains its great success: many handset makers suck at writing software. When it comes to the Nexus One, and as far as potential buyers are concerned, it comes down to: what is the price of (carrier) freedom? Drop your price in a comment below.

Update 12/13: T-Mobile is rumored to provide official support. No word on AT&T. More photos have surfaced, including this home screen.

Hubert Nguyen
Categories: Cellphones, Top Stories
Tags: Android, google nexus, gsm, nexus, nexus one, Thoughts, unlocked