Posted by A computer that is in every person’s hand that connects them to information and everyone else in the world.
Too many people think that the launch of the Nexus One (the Google phone) yesterday was Google’s competitive move against Apple‘s iPhone or BlackBerry. It wasn’t. Just take a look through the major business and technology newspaper columns, websites and Blogs, and you’ll see charts comparing the Nexus One to the iPhone and BlackBerry ad nauseam. There’s a lot more to this announcement than meets eye (and it has a major effect on how we’re going to be doing marketing and communications in the coming years). In 1975, Bill Gates and Paul Allen (the co-founders of Microsoft) had a vision "of a computer on every desk and in every home." Yesterday’s announcement of the Nexus One was another step in the evolution of that Microsoft desire as Google takes it a step further by trying to get a computer into every hand.
It’s too expensive to get into everybody’s hands.
Today it is. Tomorrow it probably won’t be. Remember, this is still early days in the smartphone wars and at this point, Google knows that the global penetration of the iPhone is still minimal. There is a huge market and opportunity to get a very advanced smartphone into areas where the iPhone or BlackBerry aren’t. So, while that will probably be the first marketing play for Nexus One, it is still the beginning. Along with that move – and as it rolls out – pricing will change and adjust.
Which brings us to innovation.
By putting advanced smartphones like this into the market, Google (just as Apple has done with the iPhone) is forcing the telecommunications industry to change and adapt… rapidly. We need better networks, better hardware and better handsets if consumers are going to buy something that is of equal (or better) value in terms of quality and features. So yes, the Nexus One is also going to change the face of the mobile industry by forcing it to adapt and innovate to these new types of devices and all of their capabilities (it is simply pushing along what the iPhone started).
But, there’s something more happening here (and this is the marketing stuff).
The Nexus One’s success in the marketplace is going to be predominantly benchmarked against how many units it sold compared to the iPhone, BlackBerry, Palm Pre, etc… Big mistake. Google could care less about how many units are sold (or how much each unit sells for). Google cares about the data. Having a phone in every person’s hand running Google applications on a mobile Google OS (hello Android) powered by Google search is going to give Google deity-like powers. It’s not just going to know what you’re looking for, it’s going to know where you are, who you are connected to, what you do, where you’re going, what you like, what you’re taking pictures of (hello Google Goggles) and oh, so much more. What is that data worth? Even if the penetration of the Nexus One hits under five percent of the entire mobile marketplace, that’s still going to be a healthy enough data sample to have some pretty astounding insights into human nature and behaviour.
What do you think that’s worth?
As that data evolves, Google will truly be able to innovate. They’ll be capable of developing hardware, software, platforms, applications and tools based off of real-world use/needs. They’ll be able to see (and probably) define trends in ways in which current marketing researchers could only dream of. We’re going to see new forms of marketing, advertising and communications evolve and emerge from this (just as we did when they monetized their search engine results with AdWords). And, this brings us back to the current pricing of the Nexus One: it would not be out-of-character for Google to change this to a free device at some point in the future. Charging you $200-$500 for a device which might make you contemplate going to a competitive device is not really worth it to Google. Your usage and data is worth way more to them than that (the price of the phone is a pittance in comparison).
Don’t be scared, this was happening anyway.
The major carriers and major device manufacturers (you know all the names and brands) are stuck. They simply can’t keep up with the pace of innovation that Apple and BlackBerry are demonstrating (it’s obvious by their lack of ability to really inspire the marketplace in recent years). In trying to alleviate that pain, they’ve adopted Android, Google applications and more Google-like stuff to get people to buy their brands. In doing so, they may be maintaining their market share, but they were also giving Google tremendous power in the mobile space. And, in case you were wondering, Google’s evolution is not about search… it is about mobile.
What do you think?
Never another podcast episode or article 
This is about two things: controlling distribution and local media dollars.
I think Google will soon step out of the making phones market. This was a fire-starter for the phone manufactures “if you don’t adopt our OS, we will launch our own phone.”
As long as Android OS is adopted widely, Google’s objective of universal reach is met. They will focus on what they are good at, the software.
Its the windows story repeated. Microsoft hardly has any plans to make their own computers as long as they can derive revenue from software.
I tend to agree with Parth, but it’s hard to predict the future. Your post somehow reminded me the utopic OLPC project, and I think too, that mobile devices are in a good position to reach large masses, way better than any cheap laptop ever was.
The pressure is already here on carriers to adjust their technology and I think they will also have to start adjusting their data pricing too, if not the majority of the people won’t be able to afford these gadgets.
A huge post and obviously im refering about the info!
Im totally agree with ya ideas.
However i prefeer the iPhone
and guess what i think in some years google will be
the giant of the world.
Always great topics mitch!
Hats off to google, they are doing some amazing things with software and utilizing their strengths in this field to gather more momentum. Mobile is just another medium they need access to and your assessment would be spot on mitch. Everyone in a sense is creating their own ‘art’ as you mentioned in your previous topic in order to keep your eyeballs focused on them instead of the other guy. Marketing is what made microsoft and apple and now I guess it’s googles turn. It will come down to what company you prefer to deal with since everyone seems to be copying the iphone and apps will be pervasive. Which begs the question, why isn’t apple doing anything about all these copycat companies?
Nevertheless google is taking the apple approach in which they control both hardware and software I think! If the user experience is good version 2 of the nexus will be even more widely adopted.
P.S. Does anyone remember the company steve jobs started when he was fired from apple? I believe the name of the company was ‘NEXT’ and ‘nexus’ from google seems to have a similar connotation to it, just an observation!
cheers,
Happy Holidays! Great subject Mitch! Google gets that free is the ticket in web 3.0. They will give away their phone. Mobile analytics are KING! Who gets there first has great opportunities. Brilliance….again from GOOGLE!
If Google really wants to get this phone into as many hands as possible they need to work with carriers to get the monthly charge down. I have no problem with the retail price but I just can’t see spending over $100.00 per month for phone service (smart phone for me, not so smart phone for the missus.) When that price gets down to about $79.00 per month, I’ll be the first one in line.
I agree that mobility is really the next frontier insofar as technology goes. I even have a blog post entitled “The Mobile Imperative”. What Google and Apple need to consider to really grow in the enterprise space is central administration capabilities (like a Blackberry Enterprise Server, BES).
RIM holds the lion’s share here. The consumer space is huge, but a play at RIM’s business dominance remains outstanding.
The December ’09 cover of Forbes reiterates this same speculation and I personally couldn’t agree more. The biggest component that Apple and RIM are missing is the secondary monetization piece. If it all comes down to equipment costs Google will win the margin battle. They are already acquiring mobile advertising companies like AdMob etc.
Who is Apple and RIM going to give up revenues to for monetizing their ad inventory? Google? They already are with the acquisition of Ad Mob.
http://www.techcrunch.com/2009/11/09/google-acquires-admob/
The free smartphone is only a couple years away once the data is in.
Correct me if I’m wrong but, another aspect that could be taken into consideration and perhaps does not have much weight in the big picture is the fact that the Google phone comes out of the box unlocked, which may seem like a small plus for us “geeks” who simply need a google search and 5 step procedure to unlock your Ebay purchased new iPhone 3GS for example (one could also buy it off the shelf, in shopping mall basements, unlocked, for 800$CDN), but for those who still don’t know how to program their VCRs to tape Late Night with David Letterman, this is huge.
Unlocking a phone means no more warranty, possible unstability due to third party cracks (ie Blackra1n for the latest version of the 3GS software for free, or some other “installation kit” for 10$ on Ebay or Craigslist), and therefore for some, a pact with the devil.
Basically, most of us do not want to bother – too complicated and too risky.
A quad band unlocked smart phone takes care of that “bump” and clears the road to total freedom when it comes to everyone’s fight against the constraints of a cell provider’s contract. No more headache for the Walmart shopper.
If it’s as easy as inserting any sim card in there, that’s it, the world is yours.
The Google phone might just be the first, true, world phone.
Living in Canada, it might mean a trip to Plattsburgh for me though …
Useful article as I will eventually get a smartphone….I still don’t have a cell phone!
cheers
Just thinking….perhaps google wants to get into the hardware business as well since the cost of developing a computer is so low (ex. netbooks). They have an office suite already in place and constantly developing new software. As we’ve seen in the past having control of both hardware/software is usually best (apple).
Personally, I don’t appreciate being forced to view ads on any device and don’t think putting ads on smartphones is the wave of the future. The best way to get my attention would be to create a useful app with an effortless user experience. I think ad agencies will have to be more creative in this sense….just my two cents here!
For me to even consider a smartphone the price will have to be $50 per month. I think these escalating costs are so ridiculous and unnecessary. Problem we have in canada is competition!
How is it that I’m able to pay $35 per month for a home phone with 1000 long distance minutes compared to cell phone costs?
This announcement is going the beginning of the end for traditional mobile manufactures who don’t have a unique value proposition. Apple’s has iTunes… and an horrific number of Apps now available. Here are a few thoughts prompted by Mitch’s post.
1. Prediction: 2010 will most likely see one of the traditional mobile players leave the market. (Nokia, Sony-Erricson, Motorola).
2. Web 3.0 Thought: Ubiquitous mobile broadband, that is cheap, fast and reliable is going to drive Web 3.0. We’re not quite there yet. Mobile Broadband is still a bit clunky, slow and depending on what country you live in, it isn’t reliable. We can be in Web 3.0 until everyone online is on an equal playing field. It’s great that Google has its phone out now, but to be honest, I’m loving my iPhone. I waited till the product was ready for me (Not the other way around), and the GS just about fits the bill (Short of 32GB not enough and battery life sucks). But until mobile broadband really hits the next level, we’ve kind of hit a ceiling.
3. New Age of computing. So if we talk about a computer with 8GB Ram, 1TB of solid state memory, that would be reasonably impressive right? What if it was your mobile device, still the size of an iPhone, but with all the bells and whistles of a high end MacBook Pro? So we go to work, and plug our phone into the cradle, which powers our dual 24″ screens and external keyboard.
As amazing and blown away as we are today with technology in general, we’re still at the beginning in many ways. Question is, does this all make life any better?
Great insight, Mitch.
Interesting how the comments talk around the cost being barrier. I agree it is now, but let’s be honest, if a pre-paid phone is now cheaper than cheap (and here in the UK, you can get a good phone for buttons with double, even treble your credit as long as you keep topping up) then it’s going to be pretty likely that the smartphone level of connectivity will get into the hands of the masses soon enough.
The two things I thought about when reading this was about the global reach and Google services.
Loic hinted at global reach.
Think about the Indian mobile market. It’s HUGE (400m subscribers in 2009). The telcos are starting wider rollouts of 3G – which means Smart/Super/Whateve-phones can come into play. If Google are running the show when that market is looking for handset, then they’ll win, right?
As for Google services, Virgin Media announced to customers this week that their email services will be provided by Google. Bringing all the functions of Gmail to their userbase – and all that data/behaviour/cross-selling potential to nearly 5million UK customers.
I can see next that they offer a Virgin Media-branded, Android powered phone at a discount…
Maybe we can expect more of this in the months ahead?
Anyway, thanks for reminding us of the bigger picture.
Peace,
W
The way Google approach the mobile field will probably force competitin to outlook the future with new glasses. The actual situation is an in between world, we don’t know exactly what’s gone happen in the next month but we know the way of using our mobile device will drasctically change.
The step from PC to mobile is not easy or even feasable from a business point of view, but many business people are eager to do it if mobile device and application can allow it.
Google will help the market to create a new world of mobile device which will affect the way we will market our business, ourselves and the way we will look to find help in all field of our life.
It will be fun and exciting to drawn in this new world of mobility as it has been when the PC world happens in the early 80’s. Let’s move foward and don’t be scare of change, grab the fun of it.
Couldn’t agree more and I’d be the last one the click the ads. But at the same time perhaps we aren’t the average consumer.
Thought-provoking as usual Mitch.
‘Google’s evolution is not about search… it is about mobile’ I hope you’re referring to ‘mobile’ in the broadest sense so that it includes eReaders, tablets etc. Afterall, as you say, it’s not about making money on the hardware. It’s about getting Google Android on every device.
I agree, for the longest time I’ve wondered why the cost of a wireless service is so high. Shouldn’t it be that the more users there are the lower the cost becomes?
I’m not so sure. Google’s primary revenue stream on the Web is advertising. They figured out a way to monetize the massive volume of search requests their servers handle by leveraging that data to target the right ads to the right people. Hooray, they made billions. But is that success repeatable? Google could end up being a one-trick pony. I’m with Peter… I don’t want advertising on my phone. Most people wouldn’t either, what with limited space — and I certainly don’t want to sit through a Chevrolet ad everytime I open an app. You’re suggesting that the real value behind Google’s strategy lies in the data they can gather on the unsuspecting public… who we call, what we take pictures of, what apps we use, where we go, etc… and that by embedding their operating system on everyone’s phone, they’ll be best positioned to be the all-knowing Big Brother of data mining. Scary. Even if they can collect that kind of data without privacy complaints shutting them down, how are they going to monetize it all on the scale that made their AdWords such a success? Sell that data to marketers? Have Chevrolet bombard me with marketing literature because 2 of the contacts in my address book own a Chevrolet and I took a picture of one of their cars? If that’s the case, the real money to be made here is in privacy lawsuits.
Everyman Links for January 7,
Everyman Links for January 7, 2010
Google is just taking the world by storm. May be after few years from now the whole web will be controlled by Google products..Anyway the concept of Google that “information for everyone” is good and I support it.
Thanks
Mitch,
It’s all about the Data Data Data…
…Location. Location. Location.
The Google aquisition of AdMob:
…aquire Intelligence on the data of AppStore. Fastest way to learn, Fastest way to build ur own store. User Habits;-)
The “Google Big Plan”:
…provide free smartphone/dataplans.
…were getting there;-)
PS: commented using my iPhone;-)
ciao
Leo Ferraro
One last thought on this….it would be nice is apps could be created by your average user instead of having to go through an app developer. There is some hint of this using bento (by apple) in which you can write small databases, although limited in function at the moment, its at least a step in the right direction…Adobe needs to step up here and perhaps even google…I think this would open up the floodgates and make using a smart phone even that much more appealing.
cheers,
As you describe it, Mitch, it seems like Google is gunning headlong into the Singularity. I was aware that such colossal data-mining is the agenda behind many Google projects/products (like, say, sourcing regional accents via Google 411 for voice recognition apps), but it hadn’t occurred to me that Google wants to live in our pockets so as to mine the last square inches of our personal space. Sharp observations as usual. If I may be so bold as to offer my video answer to the Google Phone – the dPhone (click my name). Cheers, DH
Mitch,
Indeed, convergence of data, communication and media just keeps on going and going. The big players (of today and the future) will continue to one up one another, and that’s a good thing, because it means more innovation for us. Smartphones will keep getting smarter, perhaps to the point that we give them another name that is more fitting.
Apple is of course a big part of this topical discussion. Here’s a real-life story that plays to your point in this post: I recently got an iPhone and was having a problem getting it to sync up with Apple’s Mobile.me service. I called customer support and spoke with a most helpful support person, who during the course of our call said, “It’s really 10 percent phone and 90 percent computer.” So that’s how Apple sees it, too.
I don’t see how the phone has really revolutionized anything. Consumers are still stuck with basically one carrier (with a very poor plan) or two carriers if you want to count AT&T’s edge. How did this shake up anything, really?