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Ads To Offset Cost of Unlocked Google Phone?
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."
I am sick of everything trying to sell me things all the fucking time. STOP!
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If libertarians are so opposed to effective government, why don't they all move to Somalia?
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.
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.
As it stands in the US, there are two well entrenched market niches for smartphones. The first of which are the unlocked phones (or the phones one pays full retail price for from a provider.) This is about $400-$600. The second is the provider sponsored phone where one pays the cost of the phone via a contract. The price ceiling in the US is effectively set for this by Apple at around $200.
The ads wouldn't be welcomed in the unlocked phone arena. If I pay the premium price tag for an unlocked phone, I won't be buying one that slings ads at me. If the contract changes while I have the phone, I'll be rooting the device and yanking that "functionality" out, or not accepting the changes in my contract and will toss the phone in the garbage. Then I will go with a provider who wouldn't pull that on me.
If I were paying for a phone subsidized over 2 years, ads are not welcome here either. If my phone gets an OTA update to become an ad vomiter, that is a change in my contract that I do not have to accept, and I will trash the phone and change providers.
So, where would the ad-supported device model come to play? I see only one place, and that is the low end market, such as the prepaid phones one sees for sale for $15-$30, or the "free" phones that come with a 1-2 year contract. Maybe this market is what Google might be aiming for, where people would tolerate ads in return for a smartphone that costs $20.
I see a problem here. Not for you, but for the advertisers. You're willing to pay not to see the ads. That's almost a good thing for those positioning themselves in the middle, such as Google, as they can essentially extort money from you: "pay up or be blasted by ads." But it's really bad for the actual people selling products because the people with disposable income and the willingness to use it are the ones who've just spent a few quid to avoid all the ads. They're even, as demonstrated by their willingness to pay, the ones who notice ads or are concerned they may be affected by them.
It's one of those stupid situations. Like Slashdot that I have actually previously been a subscriber to (stopped because they only accept PayPal now), which has their inducement to subscribe be eliminating the ads - on one of the few sites where I'm actually occasionally interested by the ads.
Aide-toi, le Ciel t'aidera - Jeanne D'Arc.
I look at telecom subsidation of phone costs as a small loan. Can't/won't buy the phone with your own cash up-front? We'll loan you that money, and you pay it back a little bit every month on your bill. This breaks down because if you buy a plan without getting subsidized, you pay a higher price per month for your phone service (ie, the same monthly payment, but with none of it going to a loan repayment).
The workaround for this: If I sign up for a 3-year contract, you can either give me a cheaper monthly rate, OR give me a phone-up front, OR give me a cash bonus upfront, approximately the same amount the subsidy would cost. That way I can take that cash and buy whatever I want with it (if it happens to be a smart phone, awesome).
THIS breaks down because the telecom wants to have absolute control over what I can and can't do on their network, and won't budge to give up any leeway there. I don't have a workaround for that one yet :)
"You know, Hobbes, some days even my lucky rocketship underpants don't help" -- Calvin
All of us using GOOG-411 and Google Voice have done a splendid job training their voice recognition system. Within a year, I predict that you'll be seeing ads relevant to the conversation you're having while you're still having it. "It's been ages since I've had good sushi!" -> ad for nearby expensive sushi restaurants.
Dewey, what part of this looks like authorities should be involved?
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.
Some drink at the fountain of knowledge. Others just gargle.
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?
It's unlocked. How soon to Ad-Block for Android comes out?
then don't buy it.
Pretty simple, eh?
The Kruger Dunning explains most post on
these are cheap, mass produced, underpowered devices using yesterday's technology for the most part. why do they cost $600?
Because even "yesterdays technology" costs a lot to produce when you have to shrink it by a factor of 10 and at the same time make it use far less power.
"There is more worth loving than we have strength to love." - Brian Jay Stanley