Google Takes Another Shot at Mobile Revolution

by Matt Klassen on November 14, 2013

Almost four years ago Google attempted to initiate a mobile revolution, changing the way customers bought their mobile devices. It was a bold strategy, one that saw Google offer the Nexus One directly to the consumer, bypassing carriers and allowing subscribers to choose what network they wanted. It didn’t go over well.

At the time the wireless industry was dominated by long term contracts, expensive phones, and exclusivity deals with mobile companies, leaving carriers unimpressed with Google’s little direct sales stunt and customers, well, just confused.

But Google hasn’t let that setback deter it from its foremost mission, however, to revolutionize the way we think about our mobile technology, and with the release of the surprisingly affordable Nexus 5 in October and now with the announcement of the Moto G for $179, both unlocked and with no contract, its clear Google is looking yet again to change the game…now we’ll see if anyone else will play.

An affordable off-contract unlocked smartphone: I’ll be honest, up until now it’s largely been a dream, as anything worth having in the mobile world has always required a significant commitment, either financially up front or contractually long term.

Like its attempt with the Nexus One, its clear Google is trying to bend the mobile market to its will, offering customers something so irresistibly different from everything else available that it seems just too good to pass up. In fact, should consumers flock to Google’s new affordable, off contract, unlocked smartphones, carriers and mobile company’s alike will have to pay attention. Heck, they’ll have to change everything about their current business structure.

In a world where consumers get locked in to long term contracts, contracts that secure financial return for the carrier but also rob consumers of upgrading when they want or finding the best deal, there’s no question consumers are hungry for change. As it stands, by signing a two year contract, for instance, carriers are able to secure subscriber loyalty for the term of that agreement, but consumers are robbed of the freedom to shop around. Now with the advent of widespread unlocked no-contract mobile devices, the world of carrier security will be gone, replaced by unprecedented choice for consumers and the competitive push to drive mobile prices down.

As CNET’s  writes, “In a world where people buy unlocked devices, smartphones become more like PCs. You pay up front then do what you want.”

But will Google be able to succeed where it has failed several times already? While Google was unable to initiate this sort of revolution four years ago, its clear things have changed—a $12.5 billion acquisition of Motorola will do that I guess—meaning Google is a unique position to offer these devices at such a low price point. As it is with Android, Google’s mobile revenue stream is not directly linked to the mobile devices themselves, so the company really doesn’t care if it makes money directly from these phones or not. Google’s money comes through advertising which is most eff ectively communicated through its bevy of useful services, and the smartphone is the best way to get those services into more people’s hands.

Simply put, by offering smartphones at the price most people pay for a subsidized super phone—customers routinely shell out around $200 for the latest smartphone on a two-year plan—but releasing them from the burden of contracts and carriers its clear Google is trying to change the way the mobile world works.

But that said, don’t think carriers will sit idly by and let it happen. The benefit of carriers, of course, is that they continue to bundle phones with service and support, allowing customers to satisfy all their mobile needs in one stop, and it’s this fact that currently makes Google’s direct sales strategy the exception, and not the rule.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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