Monday, December 14, 2009

The "Google Phone" (HTC Nexus One) Begins to Make Sense

A short time ago, Engadget posted part of the FCC certification for the HTC Nexus One, the phone that Google mass-distributed to its employees last weekend. There's been a lot of speculation that the GSM-compatible would be sold unlocked by Google (meaning that in the U.S., it would work with AT&T and T-Mobile.) Frankly, a lot of the story didn't make sense--why would Google start competing with its biggest distributors just as Android started getting market traction?

The FCC certification shows that the Nexus One will work on a variety of international GSM networks, but it will only work in the U.S. in G3 on T-Mobile--AT&T customers can use it as a phone, but data speeds will be limited to EDGE. And, now the story begins to make sense. T-Mobile has been Google's primary partner in the U.S. since the launch of the first Android phone, the G1.

So, here's my speculation: Google is going to sell the phone, and technically, it will work on either T-Mobile or AT&T, but there will be a special T-Mobile account just for the Google Phone. It will be based on T-Mobile's Pay-as-you-go pricing models, and it can be considerably less expensive than T-Mobile's prepaid plans because T-Mobile isn't subsidizing the price of the phone.

Google will, in my opinion, subsidize the price of the phone, because the user will be locked into a suite of advertising-supported Google functions that work anywhere, even on WiFi, and even if the Nexus One doesn't have any GSM SIM card at all. (Yes. that means that Google Phone users will be able to take advantage of Google Voice wherever there's an open WiFi hotspot.)

T-Mobile won't be threatened by the Google Phone, because they'll be the preferred broadband voice and data service. Verizon won't be threatened, because the T-Mobile 3G network is even less well built out than AT&T's. Sprint has a foot in just about every camp, and they're becoming less of a market factor every day. AT&T is hostile to Android, so there's no reason for Google to play nice with them. Perhaps most importantly, Google has a chance to dramatically increase market penetration of Android phones and the appeal of the Android platform to developers, and they'll move a lot more mobile advertising inventory.
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