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What’s the best way of buying a phone today?

How did you buy your latest phone?...

MWC: What device highlights did you miss?

So, early last week I predicted that...

The new way to purchase a consumer phone:

Well then, this is another day to remember. It’s the day Google got stuck into mobile merchandising and nailed the mobile operator to the wall.

That’s it: Thank you for coming, mobile operators, thank you for coming. You did your best. But now you’ve been ‘owned’. Well.. not yet. But do look out for the big G.

With the Nexus One, Google has ushered in an entirely new way of buying a consumer handset: From their website in 6 clicks.


Is it that simple? Yes.

You visit and select your financing option. You either buy your phone outright, or you get it financed by a bankmobile operator that also supplies your voice and data connection.

If you’d like a Nexus One — Google’s newest device — they’re shipping right now. You buy it from Google. Not from your operator.

Your operator is an also-ran. The operator has been relegated to bit-part status in the new Google process. It’s like choosing whether you want to pay with MasterCard or Visa. It doesn’t make much difference. Indeed you can never remember if your Capital One is Visa or MasterCard… pull it out your wallet — oh, it’s Visa — right then, Visa it is.

It won’t be long until I’ll just pay Google. I mean, what is the sodding point messing around choosing operators when Google just sorts it out.

Yes, we’ve had decades and billions of marketing dollars spent making sure we ‘care’ what operator we select. But, again — like any commodity, the reality is there isn’t much difference between operators. Who do you buy your electricity from? In the UK, the market has been opened to competition so instead of one supplier for an area, you can actually choose to pay a whole array of different suppliers. Most people stick with what’s easiest.

When it comes to, that’s what a lot of consumers will do.

I think it’ll be a little while before consumers — the normobs, the Great Unwashed — descend on and begin relying upon for their telecommunications needs.

You can see it happening though.

You can see the strategy.

If you, as an operator, are not on the page, then you’ve got a problem. 100% of people buying through this mechanism will never, ever choose you.

And Vodafone’s done the European deal, it seems.

Soon you’ll be able to buy all manner of handsets through All through a nice slick 6-step interface and powered by your Google Checkout account.

There are pitfalls of course. Your average mobile operator is — by now — pretty good at dealing with fulfilment. If I phone 3 at 11am on Monday and arrange for a new handset, provided it’s in stock, it’ll be at my door by 9am on Tuesday. Operators also have the rest of the fulfilment stream managed reasonably well. How will Google handle returns? Can I phone Google and complain about lack of T-Mobile signal? Where does my relationship lie with the transaction?

The overriding issue with Google is that they don’t give a stuff about the mobile operator. The mobile operators are standing in Google’s way. Google’s focus is — as commented via the Gizmodo coverage of the live event today — mobile advertising revenue. They are making a small margin on unit sales, but, “making sure people get access to Google services and get online is their #1 priority.”

To put this in perspective, here’s another quote from today’s event:

People search the web 30x more on an Android phone than they do on a feature phone.

The concept is not surprising. A shitfeature phone is rubbish for searching online. Oh the browser can handle displaying Google, but when it comes to anything else — and in particular, browsing search results featuring Google Ads — the devices are useless.

The fact Google report 30x more searches is quite surprising. Yet I can believe that figure. And goodness me when you start counting the billions of dollars of mobile ad revenue to be had over the next 5-10 years, yeah… Google definitely needed to wade into the existing marketplace more or less hampered by the operators.

Putting Google as the search engine of choice on the operator portal has been useful, no doubt. But I can certainly understand this strategy. If anything it points to the commercial imperative Google feels as they analyse the growth and potential of the mobile world.

Fascinating times.

If you’d like to read Google’s viewpoint, the team over at the Official Google Blog have prepared an overview of today’s announcement. It really does make interesting reading, especially when you read between the lines. Here it is: Our new approach to buying a mobile phone.


  1. I truly don't understand why this phone is getting so much hype. It's not the first phone you can buy online, and it's not the first Android phone.

    If there's someone who's opinion I respect in the mobile business, it's yours. Can you explain better why you believe this phone is worthy of so much attention?

  2. It's not the phone but the method of distribution that I think is something to watch. If Google can use it's might and trusted brand to move consumers to the point that it's selling (for example) 50,000 devices a week through it's portal, then yeah, I think the game will change.

    I'm with you, though, on the lack of 'wow'. Android 2.1. Really nice media features. A bit of a better camera. It's thin. Whatever.

    Can Google move the market to change how mobile phones are purchased and distributed? I really don't know. I hope so as it'll really force some innovation.

    I think this move is about just that — innovation. It's going to get a lot of companies — operators in particular — carefully studying Google's approach. If there's any hint that Google could substantially change the 'game', then I'd like to be the fly on the wall at the mobile operator board meeting.

  3. For me its the fact that there's a whole range of things coming together in this launch that, if it takes off with consumers, could – I repeat could – be a major problem for mobile operators. Its not as if this problem hasn't been coming for a while, but this might be the first manifestation with the potential to get significant penetration.

    Distribution is one part of it. Consumers dealing direct with Google in this way relegates the position of the mobile operator to a pure commodity provider of connectivity (data primarily, and maybe voice/text) with little value of their own to add. With little value-add on a commodity product operator margins are likely to drop.

    Its true that its been possible to buy mobile phones on the Internet from companies other than mobile operators, but the fact that its under the Google brand might mean that this has more chance of success with the mass market of normal consumers.

    Its not just distribution though. It positions Google and other potentially other app developers right there on the mobile phone – in a position to take and run over IP services that mobile operators have traditionally relied on for much of their revenue – voice and messaging. The iPhone has the potential to do this too of course, however Apple / AT&T in the US for example are reluctant to allow such apps at present. Google are less likely to block apps that threaten mobile operators bread and butter services. Indeed a good example is Google Voice, which could well develop to use mobile data which would cut the mobile operator out of voice call revenue entirely. Finally it also confirms Google as right in place on the mobile phone to ensure that they are in control of as much of the advertising as possible that reaches you on your mobile phone.

    Its not nailed on that it will meet mass market success, but I think its a very strong signpost of things to come in mobile.

  4. Surely the main reason this phone is getting so much hype can be summed up in one word – 'Google'.

    Google is like Microsoft of old when it comes to mobile – it's the 800lb gorilla in the room that everyone is waiting to move to see what happens next. MS seemed to just miss out at every turn, but if Google can get it right then it could be game changing.

    As Ewan says, it seems that the game changing element could be the business model much more than the hardware, but it was always likely that the hardware would be lower down the list of Google's priorities anyway.

  5. OK, all very interesting points, and already some points of interest to follow up on.

    But, the whole

    “Oh the browser can handle displaying Google, but when it comes to anything else — and in particular, browsing search results featuring Google Ads — the devices are useless.”

    I just did a Google search on my N85 three different ways. I used the google app, Opera Mini and the native browser. I searched for hotels. In the city closest to where I live. I also did the search on my desktop. The google app completley failed to dial the phone number in any of the three adverts shown on the top of the results page properly, even though it knows what country I am in. The results returned by the S60 browser and Opera Mini all allowed correct dialling of the number in the ads at the top of the page fine. So ignoring the fact that I am most likely doing something wrong with the Google app, and that this is the first time I have EVER been interested in the ads that Google serve with a result can you explain why you think this is where Google will make money. Do people really only search for something for the adverts that Google serve? Am I really just one of a really small minority, who no matter how desperate I am for something, actually takes the time to click on multiply returned results and read up on things before picking one?

    Maybe this is why Android as a whole seems to have come over as being totally underwhelming to me. Maybe I just haven't drunk enough Google Kool-Aid…

  6. To be honest, I can't imagine a phone without a physical keyboard being my main handset. And at the moment I'm intentionally using a second phone that doesn't plug me into my emails / Twitter etc so that I can take it out and not be constantly checking / updating.

    So, although I'd like to support this move, probably not.

  7. I think it's more of a bet on the future on the part of Google, Gareth. The Google Kool-Aid (in this particular context) is about the possibility of the company shifting the paradigm for mobile handset (and possibly, service) distribution.

    As for Android, it's another bet. A reasonably good one — if you subscribe to every punter on the planet being able to access Google services at the touch of a button on a $49 reasonably capable Android handset. The jury is most definitely out, though.

  8. Right. Now I understand better. Again, good points…

    …Yes this could really shake things up…

    …Wonder what the boys and girls in Espoo and Tampere are thinking now…

  9. Operators really had their time. 10 years they talked about location based services. How much they have done? Now other guys can bypass them. And I think it is good for the whole industry. App developers can get their things to consumers, not spend 5 years with some operator managers to sell their idea and make free of charge pilots.

  10. Nico – as Ewan points out, it is not the phone or it's capabilities that are exciting here – it is the mode of distribution.

    Up until recently the Major Network Operators have had a stranglehold on the way in which most end users get their handsets. Consequently, as the MNOs have been the primary customers for the handset manufacturers, they have been able to call the shots on which features and functionality that gets built into the handset. Take for example, the Blackberry Storm, 'designed for Vodafone' – which meant that WiFi was omitted (presumeably as it presented a threat to 3G data use)! End result – a top end smartphone without WiFi – which is a configuration that I would not contemplate purchasing!!

    With the MNOs unplugged from the technical specification decision making, we could see some more truly innovative (internet based) technologies finding their way into handsets.

  11. …and in answer to the question “Will you be buying a Google Nexus One?”

    … the answer is, Yes I would, if I were not the owner of a shiny new HTC Hero Android handset!

  12. I can see this being $399 within 6 months, just like the iPhone did. Just profiteering from the early adopters.


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