Google's Nexus 5: A radical move in smartphone ecosystem

New Google device runs KitKat and boasts a low $349 unlocked price, to be sold only on aggressive service plans from Sprint and T-Mobile

Google has long been known as a tech innovator with its Gigabit Fiber and Google Glass projects, among others. Now it's emerging as a radical strategist in the wireless ecosystem.

The latest example of Google's development prowess is the Android 4.4 KitKat-based Nexus 5 smartphone that was unveiled on Thursday. The LTE-ready Nexus 5 has a 4.95-in. display, weighs 4.6 ounces and runs a powerful Snapdragon 800 processor clocked at 2.3 GHz.

In a blog post entitled "Android for all and the new Nexus 5," Sundar Pichai, Google's senior vice president for Android, said: "Building a platform that makes mobile phones accessible for everyone has always been at the heart of Android." That philosophy, Pichai said, ties well to the Nexus 5 and KitKat, which dramatically reduces the memory needed in an Android phone.

A little-noticed piece in Google's strategy to help get mobile devices to the "next 1 billion users" is that the only US.. carriers that will sell the Nexus 5 are Sprint and T-Mobile, the nation's third and fourth-largest carriers, respectively.

The far bigger AT&T network will be able to run the Nexus 5 over LTE with the purchase of a SIM and wireless service, but the carrier will not be a retail seller of the device, Google confirmed. AT&T wouldn't comment.

Meanwhile, Verizon Wireless, which is nearly tied with AT&T as the largest U.S. carrier, doesn't have the correct wireless bands to run the Nexus 5, Google confirmed.

Google's Play store is already offering an unlocked Nexus 5 starting at just $349, about $150 to $200 less less than many comparable unlocked smartphones.

Best Buy, Amazon and RadioShack will also sell the new Google phone.

T-Mobile, which is building a reputation as a rabble-rouser in the wireless world with its "un-carrier" initiatives, would only say it will sell the Nexus 5 "at an affordable price" on its Simple Choice plan "in the coming weeks."

Meanwhile, Sprint, which has championed unlimited data plans for several years, said it will sell the Nexus 5 starting Nov. 8 for $149.99 after rebate and with a two-year service agreement, or for $18.75 a month with its One Up service plan, which starts at $65 a month.

At Sprint, the Nexus 5 will operate over three wireless bands that work with Sprint's Spark wireless technology to support an active handoff of an LTE signal between the 800 Mhz, 1.9 GHz and 2.5 GHz bands to increase speeds to more than 50 Mbps, up from the average of about 10 Mbps in conventional LTE networks.

Sprint has five cities on its Spark network, which should expand to 100 cities in the next three years.

Sales of the Nexus 5 by both T-Mobile and Sprint won't be constrained by carrier subsidies, which makes the value compared to competitors "very obvious to the consumer," said Gartner analyst Carolina Milanesi.

The $349 unlocked Nexus 5 is a "good value for the money to get the pure Google experience in the hands of consumers and the latest software, too, with KitKat," Milanesi said. "This is as much about making sure that the right experience is delivered so users become loyal to the Google ecosystem as it is about widening the [smartphone] installed base."

Some analysts noted that AT&T and Verizon still have plenty of top-flight phones to sell -- citing Samsung's Galaxy S 4 and Note 3 and the Apple iPhone 5S and 5C -- minimizing the impact of Nexus 5 sales by smaller competitors.

"I wouldn't read too much into which carriers get to sell the Nexus 5," said Jack Gold, an analyst at J. Gold Associates. "Google is probably just trying to spread things around a bit."

Other analysts had a different take.

Google could be trying to prop up Sprint and T-Mobile with retail sales of the Nexus 5 on their unusual data plans, though it's most interested in making smartphone coverage universal, said Gartner analyst Bill Menezes.

"Sprint doesn't need propping up, per se, given it already has the same marquee devices as everyone else, but it is a big plus for Sprint to have an additional, somewhat more affordable phone that will work on the new Sprint Spark connections in time for the holiday season," Menezes said. "It's a great way to start getting traction among the tech chattering classes so that as Spark availability expands in 2014, there's some buzz about how the service performs on a tri-band phone like the Nexus 5."

Menezes said that T-Mobile's price structures are a "nice fit with a high-end Nexus 5 phone that is $150 cheaper at full, unlocked price than the HTC, Apple and Samsung high end devices."

With the Nexus 5 pricing, new KitKat OS and new service plans from aggressive challengers like Sprint and T-Mobile "this will be an interesting holiday season," Menezes said.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen, or subscribe to Matt's RSS feed . His email address is mhamblen@computerworld.com.

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