I've been wondering about the "SIM-free only" strategy. In the UK, SIM-free is an established but niche sector. You only buy SIM-free if the phone model is the differentiator, and that's only true for power users. (The iPhone has started to push hardware-as-differentiator toward the mainstream, but I don't think it's there yet.)
There are different kinds of power users, but one identifiable segment is the messaging-centric user, who wants a physical keyboard, which this phone doesn't have. From that perspective SIM-free is an odd choice. Maybe the multimedia / entertainment / "cloud services" power user segments are big enough to justify it, though.
If the article's wrong and this is a big move by Google, it could be an attempt by them to promote SIM-free as an option. It would make it a lot easier for their Android partners and themselves to compete on handset hardware if consumers actually have a choice of handsets (and aren't restricted by which carrier has coverage in their area).
I disagree with the article's conclusion on pricing though:
> The iPhone actually costs $599, but what most people see is the $199 price after its carrier subsidy. Google could release a truly $199 phone, but they'd lose a huge amount of money on every sale.
Not all phones cost that much SIM-free. High-end Nokia phones have comparable hardware and build quality to the iPhone, but some of them (e.g. E series) sell for £200 unlocked.
For one thing, the iPhone might well cost significantly more to manufacture than the Nexus One. Apple had no prior experience of manufacturing phone hardware, whereas HTC have lots; HTC also probably have lots of efficient supply lines Apple don't yet have. Also, it's 2.5 years since the iPhone release; even assuming the hardware and build quality are comparable, costs should be lower by now.
Also, offering subsidised products to drive advertising traffic is sort of Google's thing.