Ever since cell phones became popular and now to the point that you look at someone like they are an alien if they don’t have a cell phone, they have been sold exclusively with cell phone service providers. It was a marketing strategy that gave cell phone carriers an incentive to force customers into signing up for 1 or 2 year contracts. The cell phone is like a printer. The printer manufacturer doesn’t give a crap about the sale of the printer, they want to hook you onto buying ink from them for the rest of your life. So, you could buy the cell phone for really cheap or even free with a contract or if you didn’t want a contract, the phone would still be locked for that specific carrier and you paid a crap load of money for it.
The Google Nexus One could change that scenario. It will be offered by Verizon for $179 with a 2 year contract, but you can also purchase it from Google for $529 unlocked. NO contracts, and you can use it with any carrier you want. For the first time, you can choose the phone you want with the service you want. The Wall Street Journal wrote about this, hoping that the Google Nexus would be the first step to cell phone providers becoming more competitive with their service plans.
By selling the Nexus One unlocked, Google gives its new phone at least one strong plus against the Apple iPhone, which is sold locked to AT&T’s network. You’ll still need to pay to use the phone, obviously — but at least you can pick your network.
Who can benefit from this immediately?
Among the obvious beneficiaries: Anyone who travels abroad. If you have a locked phone, you may end up paying rip-off roaming fees. With an unlocked phone you can just switch SIM cards and use a local carrier. The savings are not trivial. I do this whenever I travel to Europe, and it can save me hundreds of dollars each time.
The article also points out that, obviously, you can buy unlocked phones right now but they are often used or refurbished and sometimes unlocking the phone voids manufacturing warranties. I know that if you jailbreak the iPhone and Apple finds out that you did it, they’ll flag your serial number and void your 1 year Apple Care warranty.
I am all for increased competition, and as an iPhone owner with AT&T service (which I hate), I hope that the Nexus does well, because I think it will be good for changing the landscape of how we do business with cell phone providers.