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TheStreet Open House

Next Smartphone Revolution Will Be Price

Once the American consumer realizes that a subsidy up front plus an inflated monthly fee is a net ripoff, there will be a move in the marketplace to buy smartphones SIM-unlocked and get service from a SIM card that you may have picked up at Wal-Mart. Thirty dollars per month can give you unlimited service, saving you as much as $60 a month, or $1,440 over two years. The consumer nets $1,000 or more in savings, $500 per year.

Those $500/year savings are already available to the consumer, so why will it matter more a year from now than today, you may ask? The answer is that the U.S. consumer is so short-sighted that the net present value benefit is harder to see if the phone costs $349 (Nexus) and $649 (iPhone), as opposed to perhaps $199 a year from now (a future Nexus phone).

2. Even lower prices for the monthly plans. If you want not only unlimited data, but you're also stuck on circuit-switched telephony and SMS, as 99% of Americans are, it's not enough to get just a $30 data plan for your smartphone. Most people pay closer to $90 because the bill adds to the $30 data also $20 for SMS and $40 for unlimited circuit-switched calling.

Google is likely to change this. I started writing in 2007, and have repeated this call in numerous articles since, that Google will launch its own integrated VoIP service. This has taken longer than I anticipated in 2007, 2008, 2009, 2010, 2011 and 2012. But it WILL happen. And I don't think we are a full year away from this. I think it will happen in 2013 -- cross your fingers.

With Google VoIP, calling may be 100% free, or you may get unlimited service at some very cheap price, perhaps $10 per month. Or you'll get something like 1,000 minutes or 3,000 minutes for $10 -- or whatever. All you need is a data plan, and you will be able to buy at least 4 gigs for $30 per month. SMS? It's already free with Google, and when they make voice free as well, people will finally wake up and start using the free SMS (Google Voice).

I predict Google will unveil this vision -- complete with $199 high-end smartphones and almost-free VoIP -- on May 15, 2013.

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