Subsidised Android Phones

android.gifI have been watching the Engadget Interview with Erick Tseng, Senior Product Manager of Android. Erick says that purchasing devices via Google is a new sales channel for ‘all’. It will be possible for carriers and handset manufacturers to also sell phones and plans (tariffs) via this channel.

What Erik describes as ‘novel’ is being able to buy phones and plans separately on a mix and match basis. This might be novel for North America but it has been the case in Europe for a very long time now. The problem with SIM-free phones (as they are called here) is that they have a high initial cost (despite a lower TCO over the owned period). The average person won’t buy a server hundred pound, euro, dollar phone and would much prefer to spread the cost via a subsidised operator supplied phone.

What Google could do to be truely innovative is to subsidise phones via advertising revenue. This might include embedding more Google advertising, for example in the built-in Google phone applications, in return for a heavily subsidised phone. So as not to upset phone OEMs, this might even be extended to their Android devices – OEMs receiving subsidies according to how much advertising revenue their devices pull in.

UPDATE: On twitter, Felipe Andrade says"could Google subsidise voice and data via ads?! It could be the end of many carriers!"