Google’s event today was supposed to be about one device, the Nexus One. Instead, we heard a lot of: “more devices,” more manufacturers,” “more carriers,” “this is just the beginning.” Today was not about one device, it was about Google’s first step in helping to reshape the mobile landscape in the U.S. And thanks to the groundwork laid by Apple, it just might work.
Think about your cellphone and cellular service five years ago. Both were likely horrible. But you were content in your misery, because you didn’t know any better. Then came the iPhone. It was a mobile device that was so good, people were willing to ditch their existing service providers en masse (I did) to go to the only one that had it: AT&T. And while you might think that would be a big plus for AT&T, it actually shifted a massive amount of industry power to Apple. They had the device that everyone wanted. And they used that leverage to renegotiate their exclusive deal with AT&T to pay out a huge amount of money for each device sold.
Sure, there were hot selling mobile devices before it — the Motorola RAZR, for example, was the best selling phone for many years in a row — but the iPhone had two advantages: 1) Thanks to Apple’s complete control over the device, including, maybe most importantly, its software, they created a user experience that the RAZR never could. 2) Thanks to the App Store, there is some amount of lock-in to the device because users are spending a ton of money on apps and if they switch phones, those all go away.
With the iPhone, Apple has created a device that all the other U.S. carriers lust after. And that, in turn, has allowed Google to come along with Android. When the G1 launched a little over a year ago, it was the first of many devices to be heralded as a “iPhone killer.” It wasn’t. But Google didn’t care about that. All that mattered to them at the time was getting their foot in the door of an industry that they, like Apple, had not at all been a part of leading up to that first device. It worked. The carriers were so desperate for an “iPhone killer” that they seemed willing and ready to negotiate with Google to get as many devices out there as possible to ride the Internet-enabled smartphone tsunami that the iPhone earthquake started.
As time went on, and Apple’s exclusivity with AT&T remained intact, Google honed their skills, and improved their software. Their manufacturing partners got better too, culminating in Motorola’s Droid, released late last year. Also not an “iPhone killer,” as I wrote that the time, that device too, was never about that from Google’s perspective (though it was from Verizon’s). It was about continuing to inundate the market with their devices and gain partnerships. With some 20 Android devices now out there, the time was right for what Google did today, which is launch their own agenda to blow up mobile industry as we know it in the U.S.
Now, that may sound a bit extreme, but just look at what Google did today. They launched an unlocked phone that you can buy directly from them. Now, this first device may not have much of an impact because it’s too expensive ($529.00) for its limitations (it will only fully work on T-Mobile in the U.S.), but it’s a first step. More importantly, look at the page pictured below. Is there any question what Google is doing here? They’re taking the traditional mobile model in this country, where you first choose your carrier, and then choose your phone, and turning it upside down. It’s what Apple started with the iPhone. But Google goes farther, because they already have multiple carriers (in this case, T-Mobile and Verizon, coming this Spring).
So why on Earth are the carriers playing ball with this? Well, they really don’t have a choice. Every carrier not named AT&T does not have the iPhone, but wants it. Since they can’t have it (not yet, anyways), they’ll settle for the next best thing, which are now more clearly than ever these Android devices. Google, of course, controls those — and increasingly so, now that they’re dictating hardware specs and features to manufacturers.
And who did Google have on stage today at the event? Two CEOs of two manufacturers: HTC and Motorola. Google has these guys in their pockets because it’s not like their going to team up with Apple to make a device (Motorola tried, and failed). And other partners, like Microsoft, are proving to be less than ideal in an iPhone world. So with the manufacturers on its side, Google has all the leverage it needs over the carriers. And that’s why we’re seeing them fall in line with the new mobile world order. So far, it is just T-Mobile and Verizon in the U.S., but Google alluded to the fact that they’re talking to the other ones as well. That means Sprint and likely even AT&T, for the inevitable day that they do lose the iPhone exclusivity.
It’s not hard to imagine going to a website for a phone one day in the near future and seeing a list of all the carriers. And it will be even less of an issue when CDMA and GSM are replaced by LTE, which will allow for more universal devices. Google set this in motion today. And it’s a model Apple is likely to follow when the iPhone gets to more U.S. carriers. Undoubtedly, the other big players, BlackBerry and maybe even Palm would like to do this too, but they haven’t had either the leverage, or the gall, to stand up to the carriers in this country the way Apple and Google have. Maybe they will in the future. But to the victors go the spoils.
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