Google Nexus One Shaking Things Up?

Google’s Nexus One is now out. Given that they distributed a phone to employees a few weeks ago, this isn’t surprising and we all pretty much knew what was coming for a long time now. Mike Pinkerton (Google Employee, Apple fanboy) has a great and rather candid review of his experience with the device.

Based on everyone’s reviews and looking at the specs it’s pretty obvious. It’s evolutionary rather than revolutionary. The big advantages the Nexus One has on the hardware side are CPU and a camera with flash. Apple is almost at the end of an upgrade cycle so it’s expected to be beat at this time. Apple’s next revision should catch up or beat in most respects. On the software side Apple could even things out quickly if it were to loosen its tight grip on the App Store and allow things like duplicate functionality. Generally speaking Apple already wins thanks to a more consistent and polished UI.

It’s pretty well-known Google isn’t looking to make money off of hardware, they want to make it easier for people to use Google services anywhere/everywhere. That roughly translates to: “we want you to view more ads”. Google is the King Gillette of the web. I’m pretty sure Google wouldn’t mind putting more apps on the iPhone and getting more eyeballs on ads. Google tried via the Google Voice App but was met with resistance.

The most revolutionary thing about it is how it’s sold directly from Google and will be pretty much feature equal across providers. You can either get it subsidized by a mobile provider (T-Mobile for now, Verizon later) or unlocked at a higher price. I’m surprised they aren’t providing their own subsidy on an unlocked phone to try to rattle the mobile market. Right now the vast majority of Americans buy phones subsidized by a provider essentially locking them into an expensive plan. People go for this because the thought of spending several hundred dollars on a phone is scary. If Google were to make an affordable phone that competed with subsidized phones but was unlocked, providers would need to start offering data plans to compete for those customers and essentially break out of the cycle that the iPhone helped strengthen. The main thing keeping people locked into plans is the phone subsidies these days. If the perceived value of that contract diminished the long-term plans would no longer be attractive and competition of hardware and service would be separate.

Of course the downside to this is Google would be throwing a ton of money to create chaos in the mobile market and likely upset mobile providers enough to march to the FCC and demand action (I doubt that would go anywhere though). Google however did make a mult-billion dollar spectrum bid in the past with the goal of keeping it open. Something they succeeded on despite losing the bid, which is possibly another win since this may have been a bluff to get policy. I’m not entirely sure they really wanted the actual spectrum.

If hardware and service competition were separate the mobile market would accelerate quicker since neither could rely on the other to make up for its shortcomings and keep selling. Each would sell or die based on its own merits.

Google’s said to have more phones in the works. I suspect at least one of those is a cheaper more affordable model that will at least partially attempt to open up the market and untie the cell phone from the provider.