The Google Phone, aka Nexus One, has only been out (unofficially) for one day and already it's causing a frenzy on the internet. Over on Mashable Jennifer Van Grove has already listed out a comparative analysis between the Nexus One and the iPhone, based on the limited information that's been released to the public.
One of the big unknowns right now revolves around the price of the Nexus One. Google is selling the phone online and unlocked. This means that the Nexus One can be used on any GSM carrier. This also means that there won't be any carrier directly subsidizing the device, which could make the Nexus One prohibitively expensive. The iPhone retails for $199-$299, but this price is heavily subsidized by AT&T, which then makes up the cost over the lifetime of the service contract. The question on a lot of people's minds right now is whether or not Google can subsidize the Nexus One down to this level.
I expect to see the Nexus One retail for $199-$299, comparable to the iPhone. Google will use the same approach it’s taking with Android and the Chrome OS; subsidize the ancillary product heavily with the end goal of generating more revenue through Google's core product: AdSense.
This all goes back to Google's Revenue Equation. Google's main strategy is to get consumers on the web and to increasingly keep our lives wired. As long as we're using the web, Google is making money, thanks to its omnipresent AdSense program.
The Nexus One is the latest product of this basic strategy, and it stands to reason that Google will subsidize the device enough to make it comparable in price to the iPhone. If the Nexus One is released unlocked and at a low enough price then there won't be any reason for anyone NOT to have a smartphone device and be connected to the web at all times.
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