Sunday, December 13, 2009

Google to sell phone directly to consumers, without contracts

Google is planning on introducing an especially Google-y phone to consumers, according to the WSJ:

Google Inc. has designed a cellphone it plans to sell directly to consumers as soon as next year, according to people familiar with the matter.

The phone is called the Nexus One and is being manufactured for Google by HTC Corp., these people said. It runs Android, the operating system for mobile phones that Google developed, they added.

But unlike the more than half-dozen Android phones made by phone manufacturers today, Google designed virtually the entire software experience behind the phone, from the applications that run on it to the look and feel of each screen.

The Internet giant is taking a new, and potentially risky, approach to selling the device. Rather than selling the phone through a wireless carrier--the way the bulk of phones are sold in the U.S. today--Google plans to sell the Nexus One itself online. Users will have to buy cellular service for the device separately.

This is groundbreaking for two reasons. First of all, while the iPhone is physically stunning, it's the software that makes it. No other phone could compete because no company had the design sense of Apple. Google, however, just might. They definitely have a different aesthetic – nobody would mistake Google's homepage for Apple's – but I think that Google's style is becoming refined enough to compete against Apple in the cell phone market, where good design has apparently eluded every company except Apple (...until now?). (Astute Google watchers will note that Android has been out for a while now, but, as the article hints at, companies always make changes to the OS, and it isn't as unified and beautiful as a pure Google produce could be.)

The second reason why this phone may be revolutionary – in a way that the iPhone won't be – is that it will be carrier-independent, and could serve to break up the dominant American cell phone market paradigm of phones subsidized by subscription fees and mandatory contracts. This could introduce a much-needed element of competition for data services among carriers, who have already started competing more fiercely for regular voice service. Unfortunately, I fear that perhaps the American market favors the subsidized phone/long-term contract for a reason – because of some market-altering policies that I'm not aware of, but that will work against the Nexus One.

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