Is Nexus One a proof that the free model does not work for mobile applications?

[jagjit]

Does it mean Google recognizes the need to monetize Android development. And they do not see search/mobile advertising to be enough. Selling their own device is the only way they can justify their Android endeavor.<p>It would also mean chrome tablet is not far behind. There are rumors already: http://www.huffingtonpost.com/shelly-palmer/google-preparing-a-tablet_b_410287.html

[jacquesm]

No, it means that if you give people items instead of a service that you will have to charge them for those items.

Free physical goods does not scale because you can't guarantee that a freely given physical good will not be put to uses that you did not envision.

The people that can do that are the mobile carriers which is why they will be able to offer you a 'subsidized' phone, they'll take it back over the time that you have the phone in your possession. It's the whole reason for all that sim-locking and jail-breaking that people do.

Offering a service and selling a piece of hardware are two fundamentally different things and have nothing to do with recouping development costs, it's just another way to make a profit and to ensure that it scales.

Have a look at the cuecat http://en.wikipedia.org/wiki/CueCat fiasco to see what could happen otherwise.