Google’s unorthodox vision to sell its own Android smartphone directly to consumers without an exclusive wireless carrier has its pros and cons.
Google’s plan will enable it to more tightly integrate its Web services in the device, adopt new business models and limit its need to share revenue with wireless carriers, according to research from Broadpoint AmTech. But key risks will be pressure on margins, competition with its current Android partners, possible failure and losing focus.
Still, plans to sell the Google phone, called Nexus One, without a carrier partner is a big victory for the “unlocked phone movement,” writes Fred Wilson, principal of Union Square Ventures.
Unlocked phones allow consumers to choose any networks they want, but they’re generally more expensive because they don’t have carrier subsidies. Wilson says carriers should focus on improving network reliability, manufacturers need to build better devices and software developers should focus on improving operating systems.
“This is the PC architecture and I’ve been hoping we will see it emerge in mobile,” he says. “I think the Google phone is a big step toward getting there.”
To be sure, Wilson describes himself as one of a “minority of users” who prefer to buy unlocked phones. And while it seems nice to have the ability to choose from a variety of carriers, it’s a concept that hasn’t really gained steam here in the US. Most folks generally don’t want to pay full-price for a phone, especially in the midst of the worst economy since the Great Depression.
Some companies, like Nokia (NOK), have tried selling unlocked phones in the US, but haven’t gained any real market share. As the Journal points out, it may be easier for the Google phone to gain share abroad, where consumers have more freedom to purchase phones and service separately.
Personally, I’m more than willing to stick with my enV phone knowing that Verizon (VZ) subsidizes a majority of the cost, even if I have to lock myself into a two-year contract.
(Scott Morrison contributed to this post.)
