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Google tries to quietly trample on Apple's toes

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Comment This afternoon Google will finally announce its mobile offering. But while Google may make a better job of trumpeting its entry into the branded phone market, the Nexus One will never be as successful as the iPhone.

Three years ago, your correspondent wrote that the iPhone, which didn’t even have a name at the time, would fail, and that article has generated a steady stream of abuse ever since.

That conclusion was based on the idea that Apple would get two things wrong: It would piss off operators by diverting their revenue streams, and refuse to accept the operator shilling in the form of a handset subsidy. Google will get both of these points right - though even that won't be enough to make the Nexus One an iPhone competitor.

Back in 2006, Apple's lack of experience with operators proved its advantage: Steve Jobs pushed far harder than anyone else would have dared and the operators proved far more flexible than expected. They showed themselves willing to hand over revenue, advertising dollars and (ultimately) customers in exchange for a little Cupertino cool.

Later even Apple had to accept handset subsidies, along with the operator control that came with them - thus we get an MMS client, and careful control of VoIP applications.

Google has experience working with operators - it's been more than a year since T-Mobile launched the G1 - so the search giant has had plenty of time to work out what operators want from a handset, and thus what they'll subsidise.

And Google's business model isn't a threat to the operators, unlike Apple's, so in theory the Nexus One should be sure-fire winner with operators. That explains T-Mobile's rumoured $350 subsidy on the $530 price of the Nexus One, which pushes headline price below the $199 Apple is asking for a (subsidised) iPhone 3GS.

Price is important, but marketing is even more so, and (quite remarkably) Apple managed to get the operators to pay for much of their advertising. The exclusive deals Apple signed with operators committed them to extensive advertising spends, and it's hard to imagine that Google will have struck anything similar. But no-one knows more about advertising than Google, with Google also being ideally placed to ensure that there's no confusion when someone is searching the internet for the latest Android handset.

Google's phone, of course, won't be exclusive. That wouldn't be the Google way, just as applications can be bought through the Android Marketplace but can also be bought elsewhere. That's very nice for geeks who care about such things, but for the majority it makes it more complicated, and today's mobile-phone buyer cares more about simplicity than freedom.

So the Nexus One will be a moderate success, bringing in a little revenue for Google and serving as a reference platform for Android developers who will flock to get one spurred on by effective on-line advertising. But the general public will continue to buy the iPhone until Google comes up with some sort of killer feature to take away Apple's crown.

By the way, if you're reading this in three years' time, please don't feel the need to e-mail me and tell me how wrong I was. I'm probably aware of it by now. ®

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