Google lowers Nexus One return fee - but is it enough?

Google lowers Nexus One return fee - but is it enough?

Summary: Google lowers its fee on Nexus One returns but it won't be enough to change the perceptions of dual fees.

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Google has dropped its "equipment recovery fee" for the Nexus One smartphone from $350 down to $150, a move that follows a government inquiry into the fees that are imposed on consumers who break their wireless contracts early, according to a Wall Street Journal report.

That's nice - but I don't think it changes anything about the perceptions surrounding those fees.

The fact is that consumers still face two separate fees. Google imposes one fee - now $150. And T-Mobile charges a $200 for breaking its service contract early. In a post last month, I argued that Google really should stick to making the Android technology better and leave the retail sales - and support - of this device to a carrier partner. I still think that's true.

From an accounting standpoint, the fees make perfect sense. They're in place to ensure that customers stick around long enough to essentially pay back - by staying on the customer roll for at least two years - the subsidy that allowed them to buy an expensive device at a discounted price.

But Google is going to stifle the adoption of devices running the Android OS - and that's a shame because has a real winner here. If anything is going to challenge the mighty iPhone and keep Apple on its innovative toes, it's going to be Android.

Yet, if consumers starting getting wind of this double-whammy on early termination fees, there's a big chance that they'll go another route when it comes time to buy, maybe Palm or Blackberry or, yes, even the iPhone.

I spent a month playing with the Nexus One and I had been really excited about getting one on Verizon when it's released this Spring. But, now I'm thinking twice. If there were an option, I'd go directly to Verizon to buy this phone and re-up on my service contract. But if I'm forced to go to Google's Web site to do this, it just might be enough to force me to rethink the purchase altogether.

Topics: CXO, Banking, Enterprise Software, Google, Hardware, Mobility, Smartphones, IT Employment

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7 comments
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  • Im excited for Nexus one..

    but all bets are off if I cant buy it directly from Verizon. I think the "option" is nice - but google shouldnt be strong arming the carriers. However the "extra" fees mean nothing to me because well, they only get them if you break your contract without clause. Can anyone verify if you break for "Material Adverse affect" (thus the carrier waiving the ETF) is that waived as well?
    JT82
    • Good luck...

      Well, if you can break a contract with Verizon *and* Google on your *own* terms, your a better Man than me, Charlie Brown.
      micheldufrenoy@...
      • Its not my *own* terms, its the carriers CA

        "Material Adverse Affect" is written into the Customer agreement and allows a consumer to terminate their wireless service if they experience this without penalty of an ETF.
        JT82
  • Owellian communism should not spread

    Don't buy them.
    sadly2010
  • Making things complicated for the user is bad

    That was one of the secrets of success for the iPhone, vertical integration and one-stop shopping. Google has made SEVERAL key business mistakes on Android, probably the worst one was that they never hired anybody from the telecom industry who knew what they were doing. Or if they did, senior management never listened to them, which is even worse.
    terry flores
  • RE: Google lowers Nexus One return fee - but is it enough?

    I can see this: [b]From an accounting standpoint, the fees make perfect sense. They?re in place to ensure that customers stick around long enough to essentially pay back - by staying on the customer roll for at least two years - the subsidy that allowed them to buy an expensive device at a discounted price.[/b] from the CARRIER's point of view... NOT from the mobile OS developer though. There is NO other mobile OS developer that charges an ETF... if I had ended my contract with Sprint early (using a WM device) Microsoft would not have charged an ETF, if I terminate my contract with VZW (on my Blackberry Curve) early, RIM won't be getting any ETF money, and if I decide to drop my AT&T plan (with my iPhone 3G) and go elsewhere Apple won't see a penny from an ETF. Why should Google be able to charge an ETF? Sure do no evil unless someone decides the Nexus one is not for them, then rape their wallet. Yeah, and people call Apple money hungry... Unless and until Google stops that practice, I'll never buy an Android based phone.
    athynz
  • Buy the phone and service separately

    Google's model makes more sense if you buy the phone and service separately. What's sometimes missed is that this is also the less expensive route: If you pay full price for the phone you can get service for $20/month less. Over the course of two years that's less expensive, and involves no return fees.
    Spatha