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How Google Could Have Changed the World With Nexus

If you thought that the world would change with the release of a Google-branded phone this month, be assured that sadly it did not.

At least not yet. It just got one more cool phone.

You can buy the Google Android OS phone, dubbed Nexus One, unlocked directly from Google. But in the United States the only place you can really take it to is the country’s fourth largest carrier, T-Mobile. Or you can buy it through T-Mobile for a hair under $200 and pay about as much per month as a Palm Pre owner and about $20 a month less than an iPhone user.

What would something revolutionary have looked like?

How about a smartphone starter plan, deeply subsidized by ads, that offered a cheap data plan to entice the “I don’t need a smartphone” crowd into joining the revolution? Even better, would have been an order form where you could buy the Google phone and then choose from three or more carriers who are competing to provide you with a data and voice plan — just as you do when you buy a laptop. Instead, there’s just the one option — T-Mobile, which costs basically the same as all the other smart phones.

Google clearly wants the mobile-phone world to look different, it’s just not clear that this phone or its current manufacturing strategy will actually bring about the changes in the telecom world that Google is looking for.

Now, getting on par with Apple (and in some ways past it) is no small feat, especially when Google made this phone in partnership with HTC, a business model that rarely leads to the hardware that the design team really wants. Compare the Nexus One, for instance, to the first Apple phone, which the world has seemingly forgotten — the Motorola ROKR. That phone was limited to having 100 songs on it, couldn’t buy songs over the air and was full of compromises. With the Nexus One, Google managed to make a device that Wired magazine’s Steven Levy called “curvy,” “classy” and “impressive.”

And that’s important, because Google has recognized that mobile computing is a massive part of the net’s future — and thus its own.

With the recent $750 million purchase of mobile-ad provider AdMob and its reported overtures to buy the popular local-business–rating site Yelp, Google is showing it clearly thinks that mobile (and local) is the next place on the net to mine for riches. But what it doesn’t like is all the ways that users could get detoured, from the time they pull the phone out of the pocket until the time their search travels to a Google server.

Remember that the more people use the internet and the faster the internet works, the more Google makes money. Low-cost, uncontrolled devices with low-cost connections equals more people using Google software and seeing Google ads, even if that phone is made by Motorola, Nokia or even Apple.

That’s why it’s pushing hard to break down barriers between the average user and an online Google ad, by finishing the mobile-computing revolution that Apple started, but didn’t finish because of Steve Jobs’ fanatical need to control the iPhone.

Google’s created the mostly open source Android OS, which manufacturers can and are using for free. That’s pushing Microsoft out of the market, and keeping carriers from doing stupid things like forcing a user’s browser home page to divert to its software store in perpetuity, no matter how hard they try to change it. And third-party-app developers can write programs for Android devices without getting permission, a stark contrast to Apple, which must approve every iPhone app and controls the only way to add programs to the device.

Google bet more than $4 billion in an FCC wireless auction in 2008 just to make sure that openness rules would adhere to new spectrum, which led the eventual winner — Verizon — to sue the feds. Google’s won a battle in D.C. to make the wireless companies subject to the same FCC rules that force cable and DSL companies to treat all online content similarly.

In short, Google wants to transform the phone market with its complicated charges, long contracts, bizarre fees and bundling of devices with service plans and make it more like how you buy a television or a computer: Buy the device. Then find the service. That’s even as cable and satellite providers look at the wireless companies and decide those contracts look like a mighty good way to keep customers.

But the question becomes how far does Google have to push, how much capital must it invest, how many devices must it design and regulators must it convince, before it can back out of the mobile hardware business and simply focus on software and advertising?

Here’s the scenario that might get us there: Google convinces HTC that it’s not suicide to create a phone that can be used on any U.S. 3G network (maybe two phones — one for GSM and one for CDMA) and then sells it unlocked. It’s a great phone, and lots of people want it, and there are lots of great apps that run on it.

Users then could then take it to whichever carrier they like, and get a data plan a la carte. The carriers will hate this, perhaps create unfairly high prices and very annoying “device registration fees” — trying to protect the money they make offering phones at an initial discount in exchange for a two-year contract.

But the FCC will have passed a rule forcing carriers to accept any device that doesn’t hurt their network — much as Ma Bell was forced to open its lines after 1968 — and Google, regulators and consumers will break down those barriers. Or the market could simply take care of it, with a desperate Sprint breaking ranks with the other large U.S. telecoms and accepting a Nexus or any other device with no registration fee and a fair price for users.

And that’s when Google will stop making phones, and you’ll know that the Nexus One actually meant something.

Source: Wired