Google raises the white flag on transforming the US wireless industry

Google raises the white flag on transforming the US wireless industry

Summary: In order to guarantee Android's success in 2010, Google has snuggled up to the telecoms and given up on changing the US wireless industry to make it better for consumers.

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The technology industry is full of once-great companies that held on to an idea, a product, or a platform too long and ended up eventually falling hopelessly behind their competitors and going out of business or being acquired because of it. Think of DEC, Sun, and Palm.

However, the yin to that yang is when a company doesn't give a new initiative enough time to run its course and pulls the plug too soon. Google has been guilty of this in 2010. The culprit is not a technology or a platform in this case. Instead, it is Google's multi-faceted strategy for transforming the US wireless industry. This ambitious scheme -- which few companies other than Google would have the influence or resources to pursue -- has been aimed at helping US mobile users. It has now been utterly abandoned.

The final indication that Google has given up on this altruistic idea is the Google Nexus S smartphone, which CEO Eric Schmidt essentially confirmed the existence of last week during his interview at the Web 2.0 Summit.

A decade from now, 2010 will likely be remembered as the coming out party for Google Android, but it should also be remembered as the year Google traded in its advocacy of wireless fairness in order to purchase Android primacy.

I'm sure there have been lots of high fives on the Google campus this year as the numbers were released showing Android passing iPhone and BlackBerry in US market share for smartphones. However, I hope that somewhere in a cubicle or a corner office at Google there have been at least a few head-shakes or face-palms, because Google has had to ditch some of its highest ambitions in order to achieve Android success. If you're really cynical, you could even argue that Google sold out the average consumer in order to bend to the wishes of the telecom companies and phone makers.

There have been lots of signs that this was happening throughout 2010 but the final confirmation is the Nexus S, which will reportedly be built by Samsung, sold by Best Buy, and locked into T-Mobile for wireless service. That may not sound like a big deal, if you don't know the history of the Nexus One, the predecessor of the Nexus S.

The Google Nexus One was released in January to breathless reviews from the tech press, but lackluster sales from the public. It was a fantastic piece of hardware, truly the best Android phone that had been released up until that point and some would still argue that it's the best overall Android smartphone to hit the market.

But, the most unique part of the Nexus One was that you could only buy it online from Google and that it was not locked to a wireless carrier so you didn't have to sign a two-year contract the day you started using it. The trade-off was that you had to pay the full non-subsidized price ($500) to buy "the Google phone."

For the US market, this was intended to be a first step toward mimicking the European wireless model where you can purchase your phone and your wireless service separately, giving wireless users more freedom to match up a preferred device with the service that made the most sense for the user's needs.

Unfortunately, sales of the Nexus One were not very good in the first quarter. Users still preferred smartphones that were $200 or less - even if it meant signing a long-term contract that cost over $1000 a year. Plus, many of the people who did pony up the 500 bucks for the Nexus One and had problems with it complained about Google's lackluster customer support.

The Nexus One, which was supposed to be opened up to all four of the big US wireless carriers, landed first on T-Mobile and then AT&T. However, before the long-anticipated availability of the Nexus One on Verizon, the product was cancelled. Then, the Sprint version was cancelled, too. Google eventually sidelined the phone and made it available only to Android developers looking for a testing device, and Schmidt said Google would not do a Nexus Two.

Now, here comes the "Nexus S," but the only resemblance to the Nexus One is that it runs the stock Android OS without any of the additional UI "enhancements" that HTC, Motorola, Samsung and others have been layering on top of Android (typically doing more harm than good).

When you combine this move -- assuming the Nexus S reports are as reliable as they appear -- with the fact that Google has cozied up to its No. 1 Android partner Verizon Wireless and punted on Net Neutrality for the US wireless networks, it certainly appears that Google has lost interest in helping shape the future of the US wireless industry to make it more it friendly for consumers. That's a major letdown coming from a company that once put up over $4 billion to bid for the 700Mhz spectrum for the sole purpose of meeting the FCC's minimum bid and forcing the winning telecoms to accept the FCC's open access rules.

Verizon's 4G LTE network is built on the 700MHz spectrum that it won in that auction. We'll see how closely it sticks to the open access guidelines when it goes live at the end of 2010.

Maybe ditching its wireless-changing ambitions was necessary for Google to achieve Android's success, but I like to think the two things could have co-existed. Google could have hired someone else to handle the customer service and retailing of the Nexus line but continued to offer unlocked, full price smartphones in the US to give users a chance to warm up to the idea. And, meanwhile, Google could have continued to put pressure on Verizon and other carriers to keep their open access promises.

We don't know the conversations that are happening behind closed doors. Google may be putting pressure on Verizon and other carriers in private while keeping a united front in public. But, it sure doesn't feel like it. It feels like Google has gotten so bullish about Android's expansion that it has tossed its consumer advocacy aside and assumed that an ascendant Android will solve all problems.

I'm sure that I will get a hold of the Nexus S and I will review it. I will probably even like. After all, the Galaxy S models are among the best Android smartphones on the market. But, based on what the Nexus S represents -- Google's surrender to the telecoms -- it will be tough to ever get enthusiastic about it.

Also read

This article was originally published on TechRepublic.

Topics: Smartphones, Android, Google, Hardware, Mobile OS, Mobility, Networking, Wi-Fi

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  • RE: Google raises the white flag on transforming the US wireless industry

    As long as users expect to buy $500 phones for $199, the carriers will always have the last say. They also don't like to share phones, because then they would have to compete on price and quality of service. Something that is much more difficult to achieve than getting an exclusivity deal with a handset manufacturer.

    Now, you could argue that you don't really need a cross-carrier Android phone, because there are so many Android phones in the market with similar specs that chances are that whatever type of handset you are looking for, your carrier will have it. It's not like back in 2007 when having an exclusivity on the iPhone also meant you had an exclusivity on modern consumer-friendly smartphones.

    The Galaxy S is a good example. The carriers do have exclusivity here (they each have a version, under different names), but the exclusivity is paper thin.
    Theli
    • RE: Google raises the white flag on transforming the US wireless industry

      @Theli
      "Subsidies" are a scam. That's what the author referred to as keeping the store open for advocacy if nothing else.

      No, you don't get it. Cross carrier is the holy grail! I don't care if Sprint has a comparable phone that's almost as good. I shouldn't have to pay $100s for a new phone just because they bought my carrier or I was offended by a previous carrier. Customer service is uniformly poor compared to, for instance, what you'd expect at MCDONALD'S, because if you don't like it, you can just switch, oh, yeah, except for the activation fees and costs of buying a new phone.
      tkejlboom
  • So Apple is the real last hope in the battle of the Carriers.

    Odd is it not? With CrapWare abound on Android, is it only Apple now that offers hope of wrenching power from the carriers? A single phone able to move from carrier to carrier (except in the US and a couple of other countries where exclusivity still remains) with the same set of base applications and configurations provided by a single company.

    I suspect, this aspect more than anything, has kept the iPhone off of Verizon. Both companies (Apple and Verizon) are control freaks.
    Bruizer
    • RE: Google raises the white flag on transforming the US wireless industry

      @Bruizer
      >>With CrapWare abound on Android

      Just HOW many fart apps are available on an iphone?
      sackbut
      • RE: Google raises the white flag on transforming the US wireless industry

        @sackbut

        In Bruizer's defense, I think what he's referring to are things like VZ Navigator, CityID, and HTC Sense/Motoblur. Adding 1,001 fart apps from the app store or android market are the consumer's choice to add after the purchase of the handset. VZ Nav is not a choice of the consumer but of the carrier, and at that it's one that isn't removable without rooting one's phone.

        Joey
        voyager529
      • really

        @sackbut that's all you have? fartapps?
        sportmac
      • RE: Google raises the white flag on transforming the US wireless industry

        @sackbut Yeah but the carriers don't preload them on the iPhone! Im a happy Galaxy S owner, but I must say this one goes to the iPhone. Apple somehow managed to retain control of what you get on the phone instead of AT&T or any other carrier putting in their stupid crapware. I wish Google starts taking some control back soon, not for the future of the platform, but for our (consumers) own good, tbh. Regardless, Android still kicks iOS's butt :D
        fer.paredesb@...
      • Beware of Google!

        Just wait until the hidden data collection of all phone services built into the Android OS hits the press...

        Did I say that out loud?

        Google is ultimately evil!
        Gr8Music
    • RE: Google raises the white flag on transforming the US wireless industry

      @Bruizer Apple has been the most proprietary phone manufacturer to date with its exclusivity to AT&T. Had they had known what the mobile platform would be today, granted, they'd probably not had signed this contract. However, they did, and that's that. But Apple is certainly no saint in ANYTHING open, which is what this article is about.
      lividcreature
    • Well, Apple Having Control Is Not Appealing Either...

      @Bruizer Apple having control is not any more appealing than the carriers having control. However, having said that, a successful approach for Apple to take the power away from the carriers also paves the way for an Android phone that is (even more) independent as well. An independent Android phone doesn't really have to be branded by Google anyway.
      CFWhitman
    • RE: Google raises the white flag on transforming the US wireless industry

      @Bruizer

      Apple is on the wrong side on this battle. Their position from the outset was to form an evil alliance with AT&T, and even if they make a Verizon phone it won't be cross carrier capable, so if you're fed up with AT&T, and your iPhone 4 is only six months old, too bad, you'll have to buy a new one to get on Verizon.
      tkejlboom
      • RE: Google raises the white flag on transforming the US wireless industry

        @tkejlboom <br>Hmm I thought Apple went with AT&T because they were able to get what they wanted in terms of how the iPhone would operate. At the time wireless service providers were unwilling to let a device like the iPhone manage its own operations. AT&T agreed but required exclusivity in return. At least that's how it was famed when when the iPhone was introduced.
        Canticus
      • RE: Google raises the white flag on transforming the US wireless industry

        @tkejlboom You are so wrong. Of course Apple would have preferred to have been on all carriers. AT&T (Cingular) were the only company willing to deal with Apple. Apple got to maintain control and AT&T got exclusivity. That was the deal...get it! Before iPhone everyone was at the whim of the Cellco's. Android benefited from Aples break through but are now losing that control leaving only Apple fighting the fight.
        global.philosopher
  • Highly premature

    I think Google has just taken a sensible detour to build the Android brand. You cannot take on the carriers and establish your brand at the same time; it is simply too expensive and risky.

    If Android achieves market dominance, taking on the carriers will be MUCH easier. This battle if FAR from over. Wait and see.
    Economister
    • Uh, tell that to Apple.

      @Economister Granted the Apple "brand" has been long-established, but the iPhone was certainly not. In fact, many people questioned whether Apple's approach (limiting to one carrier, at least initially, and tightly controlling the ecosystem) would even work, let alone succeed. But Steve's obssesion with maintaining his vision [AKA megalomania] was proven out.<br><br>The problem with Android for Google is that the toothpaste is out of the tube. The carriers don't need Google, as Verizon is clearly showing, they can put crapware and Bing on thier flavors of Android and leave devices on their shipped OS version and still sign up lots of lucrative data plans. <br><br>The real question is does Google <i>care</i>? Their mobile stategy isn't about selling handsets or even software, it's about selling ads. As long as Android users keep generating input to "the algorithm" Google is probably happy.
      matthew_maurice
      • I agree

        @matthew_maurice

        Android does not even belong to Google, but the Open Handset Alliance (if you can say that any open source SW belongs to anybody). I think Android was a response to iOS, which threatened to become dominant.

        I do not think Google wants to deal with handsets nor OS's. As you say, they just want to sell ads, and Apple was a huge threat on mobiles.

        The only exception is Chrome, which Google will use to tie into its cloud services, and it will still sell ads.
        Economister
      • RE: Google raises the white flag on transforming the US wireless industry

        @Economister
        "I do not think Google wants to deal with handsets nor OS's." While I'm not sure that is 100% accurate, especially with the statement above and the high-5's. I also don't think they can. Our experience here and with articles we have read and continue to read. Google is horrible at customer service, - especially the enterprise level. At this point this maybe an Achilles heel for them, but I'm sure they are working on that problem, I would hope so.
        ItsTheBottomLine
      • RE: Google raises the white flag on transforming the US wireless industry

        @matthew_maurice

        Did you even read the article? It's not about the software on the device. Even the Nexus S is getting stock OS. This is about vendor lock-in and one sided contracts. We're talking about vertical integration monopoly, Apple's bread and butter, and how it's bad for the consumer.

        Furthermore, I'm sure Google sees having the option of Bing on Android as a smashing success, even is some default to it out of the box. See the decade long legal disaster of Netscape v. IE for why that's important.
        tkejlboom
    • RE: Google raises the white flag on transforming the US wireless industry

      @Economister

      Hope you're right...
      tkejlboom
    • RE: Google raises the white flag on transforming the US wireless industry

      @Economister

      Hope you're right...
      tkejlboom