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Ads To Offset Cost of Unlocked Google Phone? 161

Posted by timothy
from the fine-with-me dept.
CWmike writes "Google isn't talking publicly about reported plans to sell a powerful Android-based smartphone called the Nexus One directly to consumers next year, but the idea is already raising eyebrows with analysts. The chief concern is that selling an unlocked phone directly to consumers, probably online, could be twice as expensive as buying one through a carrier. The unlocked approach has largely failed in the US, with the world's biggest phone manufacturer, Nokia, doing poorly with the concept. Nokia recently announced that its two direct-sales stores in Chicago and New York will close early next year, while online sales of unlocked devices will continue. Conceivably, Google could offer its phone at a price comparable to a subsidized phone from a carrier — as long as customers agree to receive mobile ads on the devices. Since advertising is central to Google's revenue model, that approach might make some sense, analysts said. 'Google doesn't want to be in the phone business or the mobile carrier business, so this must be about something else, and that's the advertising business, since Google is in the business of selling ads,' said Kevin Burden, an analyst at ABI Research. In one mobile advertising model being tested in Germany, users agree to receive a certain number of ads on their phones to reduce their monthly cellular and texting rates, although reducing the up-front cost of the actual device is relatively novel. Reinforcing the idea of using mobile advertising with direct sales of unlocked phones, Google bought AdMob in November."
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Ads To Offset Cost of Unlocked Google Phone?

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  • Something Else (Score:4, Interesting)

    by MozeeToby (1163751) on Tuesday December 15, 2009 @01:27PM (#30447670)

    Google doesn't want to be in the phone business or the mobile carrier business, so this must be about something else, and that's the advertising business, since Google is in the business of selling ads.

    This is just my guess, and I'm not highly paid analyst, but isn't it possible that Google understands that it is in their best interests to have a more open cell phone market. I thought from the start that it was obvious that that was the purpose; originally they were going to do it by strong arming the bandwidth auctions but that fell through and they weren't prepared to actually bid and implement the system themselves. Now they've moved on to working within the system, opening what is arguably one of the best mobile OS's to any manufacturer that wants it, provided they play by certain rules including a minumum level of openness.

  • Unlikely (Score:5, Interesting)

    by watanabe (27967) on Tuesday December 15, 2009 @01:27PM (#30447678)

    I think it unlikely that Google would use on-device ads to help phone costs: their traditional strategy has been to use ads to monetize core offerings, not ancillary ones. Ancillary offerings bring you back to the core offerings, where ads are effectively placed.

    There's so much speculation right now on the market, but I think that it's clear that Google could do something really interesting without the use of on-device monetization right now, e.g. the $199 unlocked super-phone that's being discussed in the more rumor-mill-ish blogs right now. If they could be cash-neutral doing that, and simultaneously disintermediate wireless carriers (a side-goal they've had for some time now), AND double Android's market share in the US, the mobile device group will be getting large bonuses, mark my words.

    A totally new business model which likely reduces the amount of uptake from consumers: not so likely right now; Google has lots of cash and wants lots of market share. It's not a time to futz around with stuff like this: consumers would generally LOVE an iphone-a-like which costs $30 a month for unlimited calling and only costs $199. If Google can get that out the door, they'll have done plenty already in the last eighteen months.

  • Even better Idea (Score:5, Interesting)

    by goombah99 (560566) on Tuesday December 15, 2009 @01:54PM (#30448066)

    Presumably Google will implement something like Apple originally planned, wherein they simply buy time in an auction from carriers. Apple had elaborateplans for a real time auction system, even letting consumers do it automaticallys (i.e. by apple) or choose a carrier to prefer.

    If they do that competitivley presumably their rateplans will be less because they are not subsidizing the phone. If they can reduce the cost further with ads then their rate plan is going to beat everyone elses.

    Guess what happens then? Well if my contract with XYZ-mobile is up, and I can move my existing phone over to the google network, then googles rates are going to be much more attractive than staying with XYZ mobile since there is no subsidy.

    I note that recently T-mobile has new plans out for the Bring-your-own-phone crowd. They are slightly cheaper and offer more minutes that the "free-phone" plans.

    On top of that, for people who do buy a google phone, then since they shelled out the cash already, they are going to stick with the unsubsidized google phone rate plan rather than sign up with a company offering "free" phones and pay a hidden subsidy they will never use? Thus this builds loyalty to google like airline miles do.

    Finally there will be corporate fleets. If the google phone lets these corporations buy phones in bulk then it's going to be cheaper in the long ruin for these companies to go with unsubisdized google rates. on top of that if google lets in third party service providers (blackberry like enterprises) then these will be attractive to corprorate fleets who want to be in charge of their own network.

    That all assumes google is buying at competitive rates on the open market from carriers.

  • twice as much? (Score:5, Interesting)

    by farble1670 (803356) on Tuesday December 15, 2009 @01:55PM (#30448086)

    the price of an unlocked phone always seemed wrong to me. these are cheap, mass produced, underpowered devices using yesterday's technology for the most part. why do they cost $600?

  • Android-AdBlock (Score:5, Interesting)

    by C_Kode (102755) on Tuesday December 15, 2009 @01:57PM (#30448106) Journal

    It's unlocked. How soon to Ad-Block for Android comes out?

  • Apple patent pending (Score:3, Interesting)

    by MouseR (3264) on Tuesday December 15, 2009 @02:21PM (#30448464) Homepage

    This is precisely why Apple filed for a patent on this recently.

    It's a way for them to block potential ad revenues from Android, protecting the high price of their iPhone.

  • by Overzeetop (214511) on Tuesday December 15, 2009 @02:51PM (#30448826) Journal

    That's alright, A friend and I had a way cool idea about 27-28 years ago about a map you could carry around and the "you are here" spot would mark your location as you moved around. Cool but impossible. Just a couple of years before, we openly mocked a fellow classmate who wanted to write a program to automatically turn on the computer. What a fool, he was. I'll say it here: Amrit (Paul) Rishi - I apologize for thinking your idea was idiotic - several of my computers now use wake-on-lan, and scheduling that brings them out of sleep to run backups.

    I just wish we'd thought about going further with that damned map idea...

  • by Anonymous Coward on Tuesday December 15, 2009 @06:44PM (#30451942)

    T-Mobile gives a $10 per month discount if you bring your own phone. On a 2 year contract, that saves $240. So if I buy a $400 unlocked phone that would have been $200 had I gotten it subsidized from T-Mobile, I'm actually saving $40 over the 2 years. Of course, that 200 dollars invested at an extremely optimistic rate of %10 return would have brought me something like 40 dollars over the 2 years but then I'd have to deal with taxes and finding an investment with a good chance of clearing 10 percent. Yeah right.

    So, the bottom line is you are actually wrong. There are situations where it pays to bring your own phone.

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