fettig.net

I think the Nexus One is a great mobile device (as a Google employee I got one at the end of December and I’ve been using it as my full time phone ever since). It was officially announced today, but in all the coverage I haven’t seen anybody talking about what a good deal it is in terms of total cost of ownership if you buy the phone without service.

Here’s a breakdown of the total cost of ownership in both cases. The subsidized Nexus One costs $179, with a $79/month plan. The phone without service costs $529, $350 more. But then you can sign up for T-Mobile’s “Even More Plus” plan, and get the same 500 minutes + unlimited data and text messages or $59/month ($20 cheaper).

So, over 24 months you save $480 in service charges, more than making up for your extra $350 investment up front ($130 net savings). Plus you’re contract free and in position to sell your Nexus One on EBay and/or jump ship to another carrier when a newer, shinier phone comes along.

The savings are so substantial that you’d even come out ahead if you put the $350 extra on your credit card at 20% interest and put the $20 a month savings towards your credit card bill (you’d have the $350 balance paid off after just 21 months). To put it another way, if you go for the subsidized plan it’s like you’re borrowing $350 from T-Mobile, and then paying it back over 24 months at a roughly 30% interest rate.

One last comparison, total cost of ownership numbers over 24 months:

Nexus One (no plan) + T-Mobile Even More Plus (unlimited text messages, 500 minutes): $1969
Nexus One with bundles T-Mobile plan (unlimited text messages, 500 minutes): $2099
iPhone with AT&T iPhone plan (choice of 200, 1500, or unlimited text messages, 450 minutes): $2000 / $2240 / $2360 (depending on text messaging plan)

Update: billshrink.com has a chart comparing total cost of ownership of various smart phones, including the Nexus One, but they don’t seem to be using the Even More Plus plan prices.