Google's Nexus One a Relative Bargain?
Price isn't everything, but for consumers who opt for unlimited data and voice plans, the Apple iPhone and Motorola Droid are looking extra-expensive compared to some of the competition.
In an analysis released this week, BillShrink compared the service plans of Google's new Nexus One, the Motorola Droid, the iPhone 3GS and the Palm Pre. The unlimited plans for the iPhone and Droid -- which are exclusive to AT&T and Verizon Wireless, respectively -- each total $3,799 for 24 months.
The Palm Pre, which runs on Sprint, is only $2,549. The Android-based Nexus One, which is carried by T-Mobile, comes in even lower as the price leader among the four, at $2,499.
Granted, you might save a few bucks up front: The Palm Pre carries a $149 price when purchased with a two-year contract, versus the Nexus One price of $179. Both Apple's (NASDAQ: AAPL) iPhone and Motorola's (NYSE: MOT) Android-based Droid cost $199 with two-year contract. Still, that savings won't matter much in the long run, BillShrink CEO Schwark Satyavolu told InternetNews.com.
"That ... cost savings is negligible, but you're going to spend a lot more on an iPhone or Droid over the course of the service contract," Satyavolu said.
The iPhone and Droid each costs $599 without a contract, while the Palm (NASDAQ: PALM) Pre and Google's (NASDAQ: GOOG) Nexus One are available sans contract for $550 and $529, respectively.
Of course, not everyone wants or needs an unlimited plan. A total cost of ownership chart at BillShrink's site comes with an addendum, "you should note that on average, 80% of Americans overpay for their cell phone service."
A comparison of the minimum service plans offered by the carriers for the four phones still shows there's money to be saved, albeit more modestly. Verizon's Droid is the most expensive at $2,599 over two years, with the iPhone 3GS, on AT&T (NYSE: T), not far behind at $2,359. You can save a few hundred with the minimum T-Mobile plan offered for the Nexus One, which comes in at $2,099, while the Palm Pre and its carrier, Sprint, offer the biggest savings at $1,829.
Cost is about the carrier
Industry analyst Jack Gold of J. Gold Associates agreed that potential customers would do well to think about the long-term costs before snapping up the latest and greatest mobile device.
"What customers and users need to be thinking about is that the service plan cost is all about the carrier, not the device," Gold said. "Sprint is very, very aggressive on price because it's trying to grab a bigger customer base. Verizon and AT&T see themselves as the market leaders, so they don't have to discount."
"The real gotcha in this market is that for the hot devices, you're stuck. If you want an iPhone or Droid you only have one carrier to go to and you have to pay more," he added.
Gold said that when -- or if -- Apple adds allows other carriers to sell the iPhone, its service plan pricing is likely to come down.
"Competition brings lower costs," he said.
T-Mobile shakes things up
Meanwhile, T-Mobile continues making waves with advanced, low-priced smartphones. The Deutsche Telekom-owned carrier was the first to offer an Android model with the launch of the HTC G1, and now, it can boast being the inaugural carrier with the Nexus One.
"T-Mobile has become very competitive with Sprint," said BillShrink's Satyavolu. "They are effectively the lowest cost of all the major smartphones you can get."
But consumers looking for the Nexus One will have to count on recommendations, reviews or possibly friends who already have the device if they want to make an informed buying choice based on more than price -- because Google is only selling the phone online at its Web site.
The Nexus One had its splashy debut earlier this week, scoring points for its sleek design, voice recognition and 3D features.
As one commenter on BillShrink's site said in response to its study, price will not be the only factor for many buyers: "This really leaves out user experience, the single most important thing with every smartphone!"