Google's Nexus One smartphone: Will mobile ads offset cost?
Unlocked phones haven't done well in the U.S. Just ask Nokia
Computerworld - Google Inc. isn't talking publicly about reported plans to sell a powerful Android-based smartphone called the Nexus One directly to consumers next year, but the idea is already raising eyebrows with analysts.
The chief concern is that selling an unlocked phone directly to consumers, probably online, could be twice as expensive as buying one through a carrier. Today, for example, the Motorola Droid from Verizon Wireless sells for $200 with a two-year contract, meaning it would go for $400 if unlocked, analysts said.
The unlocked approach has largely failed in the U.S., with the world's biggest phone manufacturer, Nokia, doing poorly with the concept. Nokia recently announced that its two direct-sales stores in Chicago and New York will close early next year, a store official said in an interview. Online sales of unlocked devices will continue.
Part of the reason unlocked phones don't do well in the U.S. is that not all of the U.S. carriers will activate every unlocked phone. And doing so is inconvenient, if not frustrating, for users who must remove a SIM card from the back of the unlocked phone and take it to an amenable carrier for activation.
"Selling directly hasn't worked as a business model in the U.S.," Kevin Burden, an analyst at ABI Research, said in an interview.
Conceivably, Google could offer its phone at a price comparable to a subsidized phone from a carrier -- as long as customers agree to receive mobile ads on the devices. Since advertising is central to Google's revenue model, that approach might make some sense, analysts said.
"Google doesn't want to be in the phone business or the mobile carrier business, so this must be about something else, and that's the advertising business, since Google is in the business of selling ads," Burden said.
In one mobile advertising model being tested in Germany, users agree to receive a certain number of ads on their phones to reduce their monthly cellular and texting rates, although reducing the up-front cost of the actual device is relatively novel.
Reinforcing the idea of using mobile advertising with direct sales of unlocked phones, Google bought AdMob in November for $750 million in stock.
Burden and Jack Gold, an analyst at J. Gold Associates, both believe the Nexus One is likely to be an HTC-built device, using Android 2.0 or higher. Gold said it might be the next iteration of an HTC developer's version he received in May at the Google I/O Developer Conference -- along with thousands of others who attended.
Gold said the touchscreen phone he received at the conference and used had six buttons on the front above the scroll ball, not the four navigation buttons shown in pictures of the Nexus One circulating on the Web.
- BlackBerry pushes BBM Protected for end-to-end encrypted messaging
- Can Microsoft's Windows Phone OS surge in market share?
- HTC One M8 called a good looker and genuine rival to the Galaxy S5
- Smartphone innovation is slowing, so what's next?
- Studies show Sprint and T-Mobile need to expand U.S. coverage
- Gear Fit: Samsung strikes again with its 'build one of any device' plan
- Nokia Lumia Icon on sale Feb. 20 exclusively at Verizon
- Samsung hints at new UI for upcoming Galaxy S5
- How 'Lenovorola' changes the mobile world
- Google and Samsung grow cozier with patent deal, Motorola sale
- Path Selection Infographic Path Selection Infographic
- Hyperconvergence Infographic A wide range of observers agree that data centers are now entering an era of "hyperconvergence" that will raise network traffic levels faster...
- Preparing Your Infrastructure for the Hyperconvergence Era From cloud computing and virtualization to mobility and unified communications, an array of innovative technologies is transforming today's data centers.
- How WAN Optimization Helps Enterprises Reduce Costs If you wanted to break down innovation into a tidy equation, it might go something like this: Technology + Connectivity = Productivity. Productivity...
- Cloud Knowledge Vault Learn how your organization can benefit from the scalability, flexibility, and performance that the cloud offers through the short videos and other resources...
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users? All Smartphones White Papers | Webcasts
Our new weekly Consumerization of IT newsletter covers a wide range of trends including BYOD, smartphones, tablets, MDM, cloud, social and what it all means for IT. Subscribe now and stay up to date!