The Carriers’ Rebellion | Monday NoteThat's quite a precise number. Not "below $100", $79.
... Google wants to see smartphones priced at $79, without subsidy, thus taking away the carriers’ opportunity to dictate features. At $79 and no contract, consumers can change handsets and carriers at will. This frees Google to have a direct relationship with the consumer, allowing their money machine—advertising today, entertainment and business services tomorrow—to run unimpeded.
Think about that. Take your time. I'll be back.
We're talking about a computer that outclasses the desktop G3 iMac of 2001. There's no reason it couldn't work with an external monitor as well as an external keyboard. Incidentally, it's a phone too.
Yeah, they're thinking big. Forget the "Chromebook" I was so excited about a year ago (though I still hope we see it). This is so much bigger.
Can they do it? Today's smartphones cost about $500-$800 without a (carrier) subsidy. This seems like a big price drop -- unless you're about 50 years old.
If you're old enough, you remember the calculator price drop. In a few years they went from about $500 to cereal box prizes.
That never happened with computers. Instead the capabilities skyrocketed -- but the price never truly fell. A 1988 Commodore 64 and a 2010 bottom-of-the-heap netbook cost about the same. The difference was partly moving parts, calculators were almost pure silicon -- computers had drives and big power supplies and keyboards and so on. A lot of the difference though was IP protection and patent licensing.
I think this would have happened to the original Palm III if it had survived, but they didn't have a business model supporting a $10 PalmOS device. Google has the business model.
I don't doubt that it will be possible in 2012 to produce a somewhat junky version of a 2009 iPhone for a marginal manufacturing cost of less than $80 -- if you can manage the IP costs and if the payor has a separate (subsidizing) revenue stream. To do it Google will have to buy some IP, and cut deals that appeal to IP holders only when you start to talk a billion devices.
In the meanwhile, China will be doing the same thing internally -- and they don't really worry about IP costs.