Mobile Neutrality and the Google Phone

Not satisfied with Verizon’s (VZ) recent launch of its Android-powered Droid phones, Google (GOOG) is now rumored to be launching its own phone. What’s unanswered in the post, though, is an important question: Why?

Now, I don’t have any inside information from Google. But given that phones like the Motorola (MOT) Droid already have the latest and greatest Android 2.0 software on them, it doesn’t seem likely that the phone is going to be differentiated significantly by the user experience. Further, given that the hardware will be built by an outside manufacturer, it seems similarly unlikely to have some brand new hardware feature set.

Instead, I see Google launching a phone, should it choose to do so, with a unique value proposition: mobile network neutrality. A net neutral Google phone could set the mobile phone market on its ear by sporting:

• No carrier lock. We’ve seen time and time again that consumers want to buy handsets and then use them on whatever carrier their household feels provide the best value to them. If Google were to go to market with their own phone, I’d expect Google to launch with an unlocked dual-mode GSM and CDMA phone, allowing it to work on any network. No carrier would want to release such a phone because carriers want subscribers locked to their networks, but a universal phone would fit right into Google’s net neutral philosophy.
• No subsidies. Without a carrier sponsor, Google’s phone would sell at full hardware price, probably in the $400-$600 range just as the original Apple iPhone did. Andy Castonguay has made the argument for how disruptive this approach could be nicely in his recent report, “The Golden Subsidy Egg’s Goose is Cooked”, so I won’t repeat it here. But suffice it to say, Google could start a trend here that no business analyst at a carrier could get behind, yet result in making carriers more profitable in the end.
• No feature limits. We’ve seen carriers eliminate or restrict the use of Android handset features ranging from WiFi support to multiple email account synchronization. With no carrier sponsoring the phone, a Google branded phone could include all the features that Android supports without having to bow to carrier restrictions.

This is the sort of phone that only Google could build and sell, simply because it has no vested interest in preserving the handset or carrier status quo. In a world where consumers regularly complain about carriers, a net neutral Google phone could be a product whose time has come.

The only question is when you can actually buy one. If rumors are to be believed, it could be next year.

Comments

[RK]

I am skeptical. There are many unanswered questions.

You can't launch a phone in much of the world without carrier cooperations. Is Google handling this or the ODM doing this?

How does Motorola or any other phone maker feel about Android if Google becomes a competitor? Microsoft would be pleased.

Is Google going to handle the customer relationship regarding the phone? What is the distribution strategy? Google has never done retail before. Think customers who spend $600 on a device would be satisfied with low overhead web based (no call center) customer support? I think not.

2009 Nov 18 02:01 PM

[bigslow]

motorola has a partnership agreement with google.
it has some exclusivity terms and a time clause.

google may go forward at some point but it would have to wait for the partnership to expire.

so motorola with it's less expensive ( free apps, storage, etc. )
and moderately more advanced than the current iphone, multiple data ports, better battery should do best in a consumer spend less get more value mind set.

Is that a reasonable thesis ?

2009 Nov 18 05:56 PM

[NoGambler]

DELL will produce an Android phone with these characteristics in 2010, and will launch initially in China and Brazil.

2009 Nov 18 11:40 PM

[c smith]

lots of questions here, including:

Billing...without a link to a carrier, how is a user of this phone permitted to even log onto a network? If I roam all over the place, who keeps track of minutes used on various networks? Somebody has to pay for the connection. Otherwise Google phone users simply sponge off of everybody else. Imagine a world where everyone was using a Google phone. There would be no networks.

2009 Nov 19 08:15 AM