Google's Android Strategy Looks to Limit Wireless Carriers: Report

Google plans to sell unlocked Android smartphones directly to customers and cut out wireless carriers. The company also plans to work with several manufacturers at once on new Nexus devices, according to a report.

Google wants to upend the power structure of the mobile marketplace by€”again€”selling Android-based devices directly to consumers, The Wall Street Journal reported May 15. The move will help it to build a more €œunited front€ with smartphone and tablet makers, taking away some power from the wireless carriers and helping sales of devices running the Android operating system to stay ahead of Apple€™s iPhone and iPad.

By cutting out the carriers, the move would also take away device subsidies from consumers.

Google additionally plans to work with as many as five device makers at once€”instead of one at a time, as it has in the past€”to build Google-branded Nexus devices, people familiar with the matter told The Journal.

Google€™s first phone, the Nexus One, was made by HTC. For its second phone, the Nexus S, it turned to Samsung, with which it also built the Galaxy Nexus tablet. It is speculated that Google is currently working with Asus on a 7-inch tablet that will run the next version of Android, called 5.0, or €œJelly Bean.€
When the Nexus One was introduced, Google broke the U.S. phone distribution model by selling it from its site with T-Mobile service. This not only required consumers to take a leap of faith, purchasing the phone sight-unseen, but put Google in an awkward middleman spot of needing to direct Nexus One owners to T-Mobile in the event of an issue. Within a week of the device's going on sale, forums lit up with complaints about everything from poor 3G coverage to miscommunication about pricing and device features.

Has enough time passed€”and Google€™s Android empire grown large enough€”for the alternate model to work better this time?

Roger Kay, principal analyst with Endpoint Technologies, offers the reminder that it€™s only the U.S. market that€™s controlled by carriers. In nearly all other markets, consumers buy their phones and then choose a carrier independently.

€œApple already broke some of the U.S. carriers' model by controlling much of the end-user experience on the iPhone, including selling directly to consumers in Apple stores,€ Kay told eWEEK. €œIn the past, the carriers have pretty much told the phone manufacturers what to make, which features to include and even what prices they will receive. Anyone with a U.S. contract can tell you that the carriers' service is abominable, coming from the legacy of the monopoly left by AT&T. Prices are high and service often inflexible.€

Google, Kay added, €œis likely seeking to improve the overall experience by taking over more of the relationship through the hardware makers.€

In addition to improving the experience of consumers, the change could also lessen the frustrations of Google and the handset makers. The Journal notes that wireless carriers often block certain apps. Verizon Wireless, for example, which has its fingers in several mobile payment pies, doesn€™t allow Google Wallet on the Samsung Galaxy Nexus smartphone.

Carriers, often, will preload apps of their own, and can be slow to push through updates, adds the report, which contributes to frustrations over platform €œfracturing.€

Google€™s decision to collaborate with several device makers at once also seems an effort to address the device makers€™ fears that Motorola€”which Google is in the process of purchasing€”will receive special treatment in the form of advanced copies or sneak peeks at the newest Android versions, though Google has insisted this won€™t happen.

The new Nexus smartphones, according to The Journal, are expected to be sold unlocked and capable of running on a number of wireless networks€”a user would just need to purchase and insert a SIM card. Without the device subsidies provided by the carriers, however, the price of an unlocked phone is likely to be $150 or $200 higher than one attached to a contract.

The mobile market has evolved somewhat, since Google€™s last try at this, Kay added, making this type of the approach in the U.S. €œmore feasible.€

With Windows Phone pushing to become a viable third mobile platform in the United States, behind Android and iOS, and Microsoft working with phone makers and carriers to offer devices like the $100 Nokia Lumia 900 and the $50 Samsung Focus 2, it will be interesting to see just how feasible it is.