Some intriguing analysis (via The Raw Feed). Tangentially, I’m surprised none of the Nexus One coverage I’ve seen thus far has mentioned variables such as Google’s mysterious fiber network and its wifi endeavors, and the possibility that Google might eventually seek to completely circumvent the wide-area wireless carriers.
It could then partner with carriers to offer the phone for free — half the price paid by the carrier, and half by Google.
Free is a very popular price. This would benefit the Android ecosystem by radically ramping up Android market share, which would provide an incentive for developers to write apps for it, which would incentivize handset makers to create phones.
What this means, by the way, is that the Nexus One wouldn't compete with the iPhone at all — or any other high-end handset. An advertising supported Android phone would be a high-end phone for a low-end crowd — a discount smart phone.
The phone wouldn't appeal to the fancy phone snobs, because the advertising would be locked down, and forced upon the user.
So my radical proposal is that Google isn't doing anything radical. They're doing what they always do: Selling advertising and growing market share by giving away free what others are selling.