Nexus One: ordinary phone, disruptive business model

by Caroline Gabriel, Rethink Wireless

Is the Google Nexus One really a ground breaking ‘superphone’, the term used by the company itself? Or merely an Android version of the HTC HD2 (complete with gigahertz processor), slimmed down and made to look like an iPhone?

The fact is, it doesn’t really matter, because the pros and cons of the gadget itself were not the point of Google’s launch into the handset market yesterday. If we’re looking for Google to shift the goalposts in devices, we’ll wait for the (allegedly) imminent ‘Chrome Tablet’ or ‘cloudbook’, which might help establish new design norms. The Nexus One certainly doesn’t do that, nor does it advance the Android software experience significantly, except by introducing the 2.1 OS upgrade.

The device is important because it is another tactic to promote Google’s desired model for the mobile world – open access, a new role for the carrier, and an ‘open’ experience rigorously monitored by Google.

In the first two respects, the Nexus One fits in a long line of Google attempts to break the old cellco model, including its partially successful lobbying for open access provisions in the US 700MHz spectrum.

The Nexus may be a revamped HTC handset, but it comes with new channels and pricing, and a sales strategy that puts Google, not the carrier, in the driving seat. While most vendors offer unlocked phones online, but rely for the vast bulk of their sales from operator channels, Google is relegating the carriers to the dreaded bitpipe role, and putting its own brand and retail outlet center stage.

Via its new web portal, it will offer the phone unlocked for $530, or with carrier plans (for around $180), but either way, the purchase of hardware and service will be done using a Google Checkout account. T-Mobile USA and Verizon will be first in the US, Vodafone in much of Europe, with these carriers’ plans available in ‘spring 2010’ alongside Nexus. The cellco will merely provide the connection, losing out almost entirely on branding and customer relationship, and bringing handset purchase close to the PC model.

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