5 Ways a Google Nexus Two Could Break Carrier Control

Rumors of a follow-up handset to Google’s Nexus One phone are filtering through the web, with Nov. 8 the reported date for a formal announcement. The date coincides with a previously planned Samsung press event, and that’s no coincidence, says Taylor Wimberly of the AndroidAndMe website. Citing multiple sources, Wimberly reports that unlike the Nexus One made by HTC, a Nexus Two is coming from Samsung, which has already sold more than 5 million Galaxy S handsets running Android (s goog), largely due to one device design for multiple carriers. Like the Nexus One, a Nexus Two has little chance of reducing carrier control, unless some key changes are made.

1. Bring on the bands. The Nexus One was originally slated to come in different models due to the four major U.S. carriers: three of which use different 3G frequencies. That’s because consumers here typically pick their carrier first, and their phone second. To enable more choice, a Nexus Two would have to follow the lead of Nokia’s latest smartphones, which have pentaband radios. The Nokia N8 (s nok), for example, works here on either T-Mobile’s or AT&T’s (s t) network, in addition to hundreds of carriers using the GSM standard around the world. One version of a Nexus Two wouldn’t work for all U.S. carriers, however, as Verizon (s vz) and Sprint use CDMA technology, which isn’t compatible with GSM. Then again, we’ve seen a few “world phones” that work on both CDMA and GSM networks, so ideally, a Nexus Two would follow suit. An integrated SIM solution similar to what Apple is reportedly working on with Gemalto could help both in the U.S. and overseas.

2. Keep it stock. Part of the appeal of Google’s Nexus One is that it uses the stock, or basic Android interface. Some might question that as an advantage because they might like the custom interfaces offered by HTC, Motorola (s mot) or Samsung, for example. As nice as they all are to use, custom interfaces hinder the software update process. It takes the manufacturer time to integrate their interface with each new Android update. More importantly, keeping the stock interface allows Google to push out timely updates to a potential Nexus Two user base. In most cases today, smartphone updates go through the carrier, which allows them to pull native features, such as the Wi-Fi Hotspot function found in Android 2.2.

3. Replace the carrier subsidy with a Google subsidy. American consumers still aren’t used to paying full price for phones, nor do most even know what the full price is for their handset. Carriers heavily subsidize hardware to lock customers into a two-year voice and data contract. A Nexus Two could change that if Google decides to pick up the subsidy instead of selling the device at full price, which is what it did for the Nexus One. Google can afford this approach; it took in $7.29 billion in ad revenue last quarter and said that mobile advertising is adding $1 billion in revenues. Even by paying for the hardware, Google will make money back through mobile ads and the harvesting of user preference data.

4. Keep, but adjust the sales model. Google almost got it right by selling the Nexus One solely over the web, but a more aggressive approach could undercut the carriers and wouldn’t require the Nexus Two to be sold in stores. Google should simply send a free Nexus Two to any consumer that requests one on the web. The catch? Consumers would have to send in their old phone to Google for recycling within 30 days, else be charged a fee for the Nexus Two. Customers with a SIM card could just swap phones and return the old handset to Google for recycling, thereby adding more Android money makers to the smartphone market for the search giant whether the carriers like it or not.

5. Swing your partner. While these approaches might begin to reduce carrier control, there’s still a big elephant in the room: Google’s Android partners could easily feel threatened, as Google’s own phone would be an immediate competitor. But few, if any, seemed threatened by the Nexus One, although ultimately meager sales likely played a factor. Still, a stock Nexus Two needn’t threaten handset makers that want to use Android any more than a stock Motorola device threatens a stock HTC phone.

The manufacturers using Android as a base platform are already trying to differentiate themselves from others now: look at the Motoblur, TouchWiz and Sense interfaces from Motorola, Samsung and HTC respectively as examples. There are ample opportunities for handset makers using Android to differentiate with user interfaces, software, services and even hardware. If the alleged Sony Ericsson (s sne) (s eric) Playstation phone is real, it’s actually a perfect example of handset could use Android in competition with a Google phone and not feel threatened at all.

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