How Google & Apple Sold Out The Cell Phone Revolution

“Where’s the revolution,” I asked when Google launched its Nexus One phone earlier this year. There had been plenty of rumblings that Google would shake up how cell phones were sold in the US. Google’s Eric Schmidt once predicted we’d all be using free phones paid for by ads. But the Nexus One simply offered more of the same-old, same-old. Buy a phone for a particular carrier and take whatever the carrier wants to shove down your throat.

Of course, I’m used to cell phone revolutions being cut short by the carriers. Apple ushered in a revolution of its own with the iPhone, making smartphones acceptable to the masses for the first time. But to get those smartest of phones, you had to live with AT&T. That’s the deal Apple cut, and it stopped a real transformation.

All this has really crystallized for me over the past month or so. I jumped to the new iPhone 4. Then I returned my shiny new device, because it was still crippled not by Antennagate but by AT&T’s lousy network. I’d have gone to the iPhone on Verizon, but the Apple-AT&T deal doesn’t allow that. In the meantime, I continue to use my iPhone 3G while I wait for Verizon to decide at its leisure to release the Samsung Galaxy device that I probably do want to jump to.

End result? I’m frustrated. In the six months since Google launched the Nexus One, sure, there are plenty of new Android devices. Android itself is a revolution, in that it has quickly gained adoption in a world that was feeling more and more iPhone-dominated (even if RIM devices were selling even more).

Still, I don’t feel my choices are that dramatically different. In the end, we’re still largely buying a device for a particular carrier and then living with that carrier for two years. It’s an absurd situation that we’d never tolerate with our computers.

Let me say up front that I’m not a cell phone expert. I dive deep into search and ponder phones primarily from a search perspective. So my observations here are more from a personal perspective as a cell phone user. But I think there’s still a lot of validity to them.

Would You Buy A Carrier-Dependent Computer?

Let me go back to the computer analogy. I have two laptops. One’s a Mac. One’s a PC. Neither is “carrier-dependent.” If I change my broadband provider from Time Warner to Comcast tomorrow, the laptops still work just as they always have. If I no longer need one of my laptops, I can sell it, and anyone can use it with ANY internet service provider of their choice.

Choice. That’s what this is all supposed to be about, right? Consumer choice. But what’s my consumer choice with cell phones?

Sitting on my desk, I have a Sprint EVO that I was given during Google’s I/O conference earlier this year. I can’t use that phone with T-Mobile or AT&T, because it uses the CDMA cell system. I should be able to use it on Verizon, but that would probably depend on Verizon solely deciding if it wanted to activate it. I should also be able to use it on Virgin Mobile, which is simply Virgin renting out time on Sprint’s network. But Virgin won’t activate it. I know. I asked about it.

Also on my desk is a Nexus One, another phone I was given, this time during the Nexus One launch event. That only works with T-Mobile, at least if you want 3G. If you wanted the Nexus One to work with AT&T in 3G, you had to buy a different model. And the Nexus One wouldn’t work with Sprint or Verizon, because it only had an antenna that worked with the GSM network.

Another phone on my desk is my iPhone 3G. This one, despite being out of contract — all totally bought and paid for — remains stuck with AT&T because AT&T refuses to unlock iPhones so that they can be used on other GSM networks, like T-Mobile.

Choice Means Devices That Can Move

Sure, I have a choice of mobile devices, but unlike computers, those devices will largely work with only one carrier. Even if you buy your smartphone without a contract, it’s largely a smartbrick if you change carriers.

Some smartphones are more expensive than computers, going for more than $500 out of contract. We’d never tolerate buying a “carrier-locked” computer, but with cell phones, we’re stuck. And some of that blame goes back to Google and Apple.

Apple, for its own business reasons, locked up with AT&T. You can have that iPhone in any color you want, in the US right now, as long as it’s colored AT&T. When the exclusivity finally expires, you’ll be buying a new iPhone, if you want to jump networks. And if you want to jump again, you’ll be buying yet another again.

It didn’t have to be that way. Apple could have decided anywhere along the iPhone product cycle that its phones should be capable of working on ANY network in the US. Then, if you wanted to pay the full retail price, you’d have really had choice. But it didn’t.

Oh, but the extra antennas needed would make it more expensive. Sure, a little. But if I can have a choice between a WiFi and a WiFi/3G iPad, why can’t I have a choice between a carrier-specific versus a carrier-independent iPhone? I can have amazing FaceTime, but the hardware geniuses at Apple can’t make a universal phone?

As for Google, same thing. The Nexus One came out only supporting one of the four major carriers in the US. Crazy. In addition, the idea of an ad-supported phone was nowhere to be seen. Google did nothing new or exciting in the space. What a wasted effort.

Life doesn’t have to be this way. I know, because I lived for 12 years in Britain, where all the major carriers use GSM. Want to take your expensive smartphone from T-Mobile to Orange. Take our your T-Mobile SIM card, slot in an Orange one, and you’re done. But in the US, our hybrid cell system allows carriers to restrict our choice. And the two companies that could fight to make that system more universal, Google and Apple, don’t seem to care to.

The Google Sell Out

Back to Google, it gave up on the Nexus One altogether. It no longer sells it to consumers, quitting back in May. Coincidentally, the number of Google-backed Android devices pushed by the major carriers have exploded, as Google backed off pushing its own device.

Is it any wonder that some feel Google sold out? That by giving up on its own phones, much less ad-supported ones or less expensive, carrier-interchangeable ones, it secured the support of the carriers?

Today’s great post by Ryan Singel, Why Google Became A Carrier-Humping, Net Neutrality Surrender Monkey, is the latest in many analysis pieces like this that I’ve seen recently. Be sure to read it.

Yesterday’s announcement by Google & Verizon that they both support net neutrality on wired networks but not on wireless ones is only inflaming the idea that Google’s sold out. From its sixth point:

We both recognize that wireless broadband is different from the traditional wireline world, in part because the mobile marketplace is more competitive and changing rapidly. In recognition of the still-nascent nature of the wireless broadband marketplace, under this proposal we would not now apply most of the wireline principles to wireless, except for the transparency requirement.

Are you kidding me? The mobile marketplace is MORE competitive than landline internet access? Where providers unilaterally add on $10 surcharges just because you’re using a smartphone, regardless of you actual data usage? Where you can’t take your expensive device and go elsewhere? Where they deliberately cripple parts of a smartphone’s OS? Where they decide to charge you more for using your device as a modem even if that usage still comes under the same data cap as allowed by native use of your device?

Google’s backing that? Seriously? We’re supposed to swallow that and not assume that Google’s making nice with Verizon, and by extension the other cell phone networks, in its quest to beat Apple in the cell phone operating system space?

Forget Porting Your Number

But hey, let’s ramp up the conspiracy even more. Wouldn’t it be nice if you could port your cell phone number over to Google Voice, and then in turn make it ring whatever cell phone you might currently be using?

Sure it would. In fact, Michael Arrington over at TechCrunch wrote exactly a year ago about how amazing this service was, when Google Voice enabled it for him. Google apparently promised that everyone would have access to this great feature. From the article:

Want to port your mobile number to Google Voice and do what I’ve done? You can’t just yet, but porting will be released later this year publicly. Prepare yourselves, and don’t sign any new long term contracts with your carrier. Life will soon be good for you, too.

It didn’t happen in 2009. An entire year has gone by, and it hasn’t happened. I messaged Google yesterday to find out why not. I’m still waiting to hear back.

I think it didn’t happen because it makes the carriers nervous. It’s another way that Google could help free up our dependency on them. So it seems to sit, going nowhere. Kind of like the cell phone revolution itself.

Postscript: Google spokesperson Randall Sarafa sent me this about Google Voice:

To your question: there’s no conspiracy. We’re currently working on number portability and hope to offer it to Google Voice users in the near future.

Related Topics: Channel: Mobile | Features: Analysis | Google: Business Issues | Google: Mobile | Top News


About The Author: is a Founding Editor of Search Engine Land. He’s a widely cited authority on search engines and search marketing issues who has covered the space since 1996. Danny also serves as Chief Content Officer for Third Door Media, which publishes Search Engine Land and produces the SMX: Search Marketing Expo conference series. He has a personal blog called Daggle (and keeps his disclosures page there). He can be found on Facebook, Google + and microblogs on Twitter as @dannysullivan.

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  • viswanathgondi

    Google did open up the phone. But did that a few years back when it invested in CLWR and led the takeover by sprint.

    Look for Clearwire to launch a phone network that will only continue open up. The other will have to follow suite once voice moves over to LTE. It will take a few years though.

    Can’t wait for the Epic 4G on Clearwire this holiday season.

  • Bayjinger

    Generally agree with your article. Google quickly realized if it wanted to be a presence in mobile it can’t compete with handset manufacturers (Apple) and carriers at the same time – so they decided to partner with carriers. Kinda shame. And I would argue Google has made far more concessions to carriers than Apple. Apple was quite bullish in its initial iphone launch – it didn’t allow AT&T to meddle with the software (no bloatware – compare this to Android phones today), and it got a cut of user revenue from AT&T (again, opposite to what Google does today), in exchange for the exclusivity. Overall not too bad a deal for a 1.0 product.
    On the topic of the “universal phone”, I don’t know the cost implications, but coming from China where we’re not locked into contracts (but have to pay full retail price – so that’s a real trade-off), I still have not seen any good universal phones. Yeah there are some “dual sim card” phones which can run on both GSM & CDMA, but the models look really clunky. For all its top models, Nokia (40% market share in China, in line with global stats) offers both CDMA and GSM versions, but never an integrated version – so I assume there are some technical / manufacturing / cost issues preventing this.
    Anyway, iPhone’s exclusivity with AT&T should be coming to an end soon – then consumers will at least have a choice of carriers, if not contract lock-in. Frankly I think the 2-year contract lock-in in the US is hard to change – consumers are used to the subsidies, so asking them to pay $600 for a smartphone instead of $200, just to get the option of switching networks in a 2 year timeframe – that’s a hard sell. Of course, it would be great if consumers at least had this option – paying full retail price to get an unlocked phone – but I doubt its impact overall. It would be appealing to people like me who travel a lot (switching sim cards all the time), but not necessarily to the general consumer

  • foremski

    The carriers have all the power which is why I suggested several years ago that Google must become a Telco otherwise it will be locked out by the carriers. I guess making deals with the carriers is another strategy…

    The carriers don’t want to be PC-ized in the same way that Intel and MSFT aggregated all the profits (60% plus profit margins) in the PC industry while the PC makers dropped to single digits (Dell profit margin is 3%, HP 7%, Apple 22% – avoided MSFT).

  • PXLated

    While I agree with the frustration, a couple of questions/nits…

    “Had to live with AT&T “- Remember though, Verizon turned it down because they couldn’t control the device. Not exactly Apple selling out. The price they paid to change the entire industry at that point was an exclusive which was very common anyway.

    “Choice. That’s what this is all supposed to be about, right?” – Is it? You’re comparing two different industries and two different networking systems. Has there ever been choice in phones/carriers here in the U.S.?

    Shouldn’t your frustration be with the FCC/Congress for allowing all this madness?

    Keeping it short as Bayjinger’s covers everything better than I could.

  • Charbax2

    Google cannot be a manufacturer of phones. They have to play with the market to advance things.

    It was not up for Google to decide the pricing of the Nexus One, or to decide on which networks it could operate and at which costs.

    Though by installing Android as the dominant platform among current major cell phone manufacturers and carriers, now Google can also enable cheaper Android handsets to be made through competition, which means we can soon buy totally unlocked Android phones for below $200 that have no contract plans. For example, carriers that do pre-paid plans will soon be selling Android phones at $99 or $199 where you simply pre-pay for whatever usage you want to use on those and have no monthly minimum subscription plan.

    Next step as well, hopefully Google has a good plan for how to implement White Spaces worldwide. They can deploy it cheaply by installing Fem2cells in all people’s homes and have those reach outside of people’s homes for covering the whole planet with free wireless broadband. For example, a while city can be covered by White Spaces network for just a few hundred thousand dollars, each Fem2cell doing White Spaces costing $10, Google just needs a few tens of thousands of residents in each city to install the router on their home ADSL or Cable connections, just like they can cover the whole city with one-login one-authentication system and still overall manage bandwidth for the wireless network. And they can add capacity with their fiber network and make the White Spaces routers a big mesh network eventually, not even requiring existing ADSL and Cable connections to work.

  • khim

    US people just don’t deserve freedom from carriers – it’s as simple as that.

    Google is just the latest company which suddenly found out that people in US are all hot air and no bite as far as mobile telecoms are concerned.

    Think about it: unlocked phones are offered in US by the biggest maker of phones in the world. It’s sells more smartphones them RIM and Apple combined. It’s market share (both in dumbphone market and smartphone market) grew so far in 2010. But it’s deemed “failed brand” in US and people are mostly ignoring it.

    Why? It’s easy: even biggest player can not fight carriers without help of customers – and they just don’t care about mobile freedom. Well, if people don’t care about freedom why Google should care? Google is powerful company, but it’s not God. It can not fight carriers if customers of that same carriers don’t support it.

    I don’t know why Google even bothered to create and sell Nexus One – perhaps they were naive enough to expect help from US people? Well, US citizen ignored the fight when they had their last chance so this means they don’t deserve mobile freedom.

    Google just admitted the obvious.

  • jdo

    in many countries around the world, phones are sold unlocked, including smartphones. So what Google and Apple do in each market depends entirely on the laws and regulations in that country.

    in the US, the mobile consumer is screwed in more ways than just carrier lockin. People elsewhere find it very strange that the US consumer pays for incoming calls — and not for landline.

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