Are Free Phones in Our Future? A VC’s Take on Why Google is Buying Motorola
xconomy.com
xconomy.com
I can't take the article seriously unless it addresses this issue in some detail.
I am not sure where the thresholds are in terms of whether or not ads can support free hardware, how this interacts with calling plans, etc. But this is definitely the way the low end of the consumer electronics market is going.
<rant>The Advertising Standards Authority should ban this type of marketing. The phones are not free, the cost is just included in the monthly contract. People never multiply £40 by 24 and realise that actually they're going to be spending £960 over 2 years. And given that the same call plans are available sans phone for £10 - £20 they're not getting any kind of deal at all </rant>
P.S oh yeah, that iphone4+ipad2 for £99 ? Try 99 + 24 x £65 (!!!) = £1,659
If I switched to sim-only and bought my phones seperately, it would save me £10/month for the same number of included minutes/data/etc.
Over 24 months that's a saving of £240. The phone I just upgraded to is currently selling at a retail price of £520. That's a pretty good deal as far as I'm concerned.
As to the ASA, the first reason against this is: nobody has EVER signed up to a contract to get a free phone, without realising that they would have to pay a monthly fee. It might confuse some people, but it doesn't mislead.
The second reason is that, even if everyone agreed that it was a good thing to do, it's pointless. Some (maybe all except the UK, I've no idea) European countries have banned this, and you know what adverts you see over there? "New iPhone, just €0.99!" Great, thank god they banned "free" phones, now people have to pay 99 cents
That's obviously great when you consider the total number of Android devices out there but Google would have to ramp it up majorly to have enough to subsidise devices.
Not impossible, certainly not if they introduced additional services (particularly paid for ones) but a way off I think.
$5.90 in 2010, increasing to $9.85 in 2012. Estimates from Piper Jaffray but based on things said by Eric Schmidt.
Android is a volume business for Google.
(By comparison each iPhone is worth $100 - $150 a year to Apple).
Strategically? They'd lose the Market (need to attract devs), lose Google apps (Maps in particular), and run the chance of diverging from the Android API (making point #1 more difficult). Oh, and absolutely no chance of Google stepping up to defend them from patent suits (and for all we know, Google might target the rebels themselves).
It's possible but you'd need fairly significant resources to make it work as there are a lot of bits around Android that aren't open that you'd need to replicate or replace.