Action at a Distance

MG Siegler: "Why I Hate Android"

MG Siegler hates Android because, he claims, Google kowtowed to the carriers. He writes that the original plan for the Nexus One back in 2010 was to sell it as an unlocked Android handset for $99, but the US carriers outright refused to support it. Google’s hand were tied so in the end it went on sale for $529 and no-one bought it. Later, Google started to support things like Verizon’s attack on net neutrality.

I see two problems with this theory.

Firstly, the Nexus One cost about $175 to make at the time, plus the significant R&D costs necessary to have designed the thing in the first place. Teardown estimates like this are far from infallible, but I think that’s enough evidence to indicate that Google would be losing a lot if it had sold Nexus Ones for $99. Even if development costs could be amortized down to $25 per sale, Google would be left trying to recoup $100 back per user just to break even. That’s a tall order for mobile ad display.

Secondly, Google’s strategy was only flawed in the US. Here in the UK, we enjoy a wide variety of decent pay-as-you-go options from our four cell networks and half-dozen or so MVNOs. This is the perfect environment for Google’s plan, as Siegler outlines it, but the Nexus One launched £330 ($510) here. Similarly attractive no-contract mobile plans are available all over Europe and in many other countries worldwide but Google didn’t even make the phone directly available anywhere else.

So if Siegler is right, and Google had grandiose plans to do an end-run around the carriers, why didn’t it simply go abroad? It could have sold the Nexus One cheap in any number of countries, then pointed to those deals to put pressure on the US carriers to open up a bit via some simple consumer activism. The fact it didn’t makes me suspect Siegler’s reasoning is incorrect.

Source: parislemon