A First Step in Google's New Android Strategy?
NEW YORK ( TheStreet) -- He's baaaaack! No, I'm not talking about a zombie in a scary movie or Mitt Romney's future press secretary, Newt Gingrich.
I'm talking about Google(GOOG) selling unlocked Android phones directly again, bypassing the cellular carriers.
Those of you with decent smartphone memories will recall that Google jumped into this strategy once before, in January 2010, with the Nexus One.
The alleged reasons why Google quietly backed away from that strategy was some combination of the following two:
- 1. Google couldn't handle the customer support. Although this isn't surprising for those who try to get customer support from any of the other free Google services, one would like to think that Google could have walked and chewed gum at the same time, compartmentalizing this product. Or, more likely, it was just a terrible execution debacle on Google's side. I mean, simply offering telephone support, if nothing else, is not rocket science.
- 2. Google was pressured, or easily bowed to, the carriers such as Verizon Wireless (a joint venture of Verizon Communications (VZ) and Vodafone(VOD) ). Again, this seems like a flimsy argument, because other devices are also sold outside carrier channels. Apple(AAPL) will sell you an unlocked iPhone, and Nokia(NOK) will do the same. Although these unlocked devices haven't been that popular in the U.S., they can be sold, and U.S. carriers seem to have had nothing to fear here.
Anyway, Google is back for a second bite at the apple here. Starting earlier this week, you can buy the HSPA+ version of the Samsung Galaxy Nexus SIM-unlocked and contract-free directly from Google for $399.
Then you can head to your local Walmart and get a T-Mobile SIM card for $30, which gives you 5 gig of HSPA+ data, unlimited overage, unlimited SMS, and 100 minutes for circuit-switched calling.
Over two years, you'll spend a fraction of what a device like this would cost you on a major carrier contract.
Just as a reminder, the Samsung Galaxy Nexus is one of the few Android smartphones shipping with Android 4.0 -- and it was the only one until about a month ago.
So why now? Last August, Google announced its intent to acquire Motorola Mobility Holdings (MMI) .
As I wrote last August , this acquisition means Google will attempt to become a more vertical company by incorporating a direct sales model, perhaps all the way to the point of opening stores similar to the Apple and Microsoft ones.
What we saw from Google this week may be an indication that it may have some big plans in this regard after it closes this acquisition, something rumored to happen within the next 30 days.
What is Google's dilemma here? The eternal dilemma of an operating system provider is that it is extremely difficult to try to be "open" and to have one's own hardware. Apple had a big debacle trying to thread this needle in the early 1990s, and Palm had the same problem in the late 1990s. These initiatives are widely believed to have been monumental disasters.