A new Nexus strategy.

The Wall Street Journal recently reported that Google, Inc. is preparing to revamp its Nexus program. According to the report, Google will partner with multiple OEMs to develop a Nexus handset for each manufacturer.

This move is a departure from Google’s previous strategy regarding its Nexus phone. The three iterations of the Nexus (the Nexus One by HTC, the Nexus S by Samsung, and the Galaxy Nexus by Samsung) were all released with a span of 11 months between them. Much like Apple Inc’s iPhone strategy, Google’s original Nexus program was designed to release one Google flagship device per year.

But if you can’t beat Apple at their own game, beat them at a new one.

The Nexus phone for 2011-2012 — the Galaxy Nexus by Samsung,

With Google’s acquisition of Motorola Mobility Holdings, Inc., Google can devote an entire division of the company to innovations in hardware design, and if they’re smart, they’ll share what they learn in this department with all their OEM partners, specifically those working on Nexus devices—companies like ASUSTeK Computer Inc, HTC Corporation, LG Electronics Inc, Samsung Electronics, Sony Mobile Communications AB (formerly Sony Ericsson Mobile Communications AB), ZTE Corporation, etc.

There are a few benefits to this type of move. First, it’s a step towards defragmentation of the Android platform. Android suffers from fragmentation on a scale unheard of in tech history. There are many contributing factors, but one of the bigger ones is that the OEMs that aren’t developing a Nexus handset don’t have a hand in developing the new version of Android and are thus relatively unfamiliar with the updated platform. If Google can involve more OEMs in the Android development process, it’s likely that we’ll see fewer devices holding on to previous versions of Android, and fewer Android skins (like MOTOBLUR, Sense UI, and TouchWiz) being so far removed from the look and feel of the stock Android UI.

Another benefit is that more OEMs get the opportunity to compete with Apple’s iPhone. The iPhone is a giant elephant in the room. It’s such a powerhouse that in order for some healthy competition to take place, several OEMs need a weapon with which to target Apple. The Open Handset Alliance needs to fight a multifaceted war against Apple if they hope to come out on top. Google can compete with iOS using Android as its weapon, but it can’t compete against the iPhone with just one partner in the Nexus program. Google can now use Motorola to back all of its Nexus partners, and HTC, Samsung, Sony Mobile, ZTE, etc., can all go to war against the iPhone. I think the OEMs will like that.

Third, the carriers get dethroned. Here in the States, consumers are owned by their mobile carriers. Since carriers don’t have manufacturing divisions, they rely heavily on OEMs for their devices. But if the OEMs can sell their devices directly to the consumers through Google (and untouched by carriers wanting “exclusive” phones), they’ll have more control over their devices and gain the opportunity to interface directly with the consumer.

And fourth, the consumer gets more choice and better devices. Nexus devices have consistently been some of the best handsets on the market. Unfortunately for Google, they haven’t exactly been the best selling. When the Nexus One was first released, Google sold the phone directly through its own online sales program. But at $530, it was a flop.

There’s a lack of education in the American market. Most people assume that a high-end cell phone will cost them $100 or $200. The reason for this is that the cell phone is subsidized by the carrier. If you purchase an iPhone from Verizon, you might pay $200 up-front (not including activation fees, etc.), but the phone itself is going to cost you around $600. The reason is that Verizon is covering the extra $400. You just have to pay them back through your outrageously high monthly plan and a contractual agreement that keeps you from trying out other cellular service providers during the next couple years.

Sneaky, isn’t it?

With the release of the Nexus S, Google sold their handsets through carriers like Sprint and Verizon. However, in a surprise move last month, Google opened an online store and began selling unlocked GSM units of the Galaxy Nexus directly to consumers for $400 (which, for the uninitiated, is a steal). It looks like Google is trying to offer choice to the consumer. If you purchase the Galaxy Nexus directly from Google, you can use the phone on AT&T, T-Mobile, TracFone, most of the Cellular One operators, Simple Mobile, etc.

Google is providing choice for the consumer. Which is always a good thing.


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