A common strategy amongst successful corporations is to “externalize” costs. By that I mean that companies will, when able, off load costs to maximize profits. This can be done for example by pushing environmental costs to offshore producers or using subcontractors to avoid labor regulations.

Google for example, often has forum participants provide support to other users in an effort to keep their support costs as low as possible. For many, many of the support areas of Google this has worked quite well. It has caused problems in the Maps area, where businesses expect, require and demand personal attention and apparently it has caused problems with Nexus support.

I guess, if you drop $600 on a phone, there is a reasonable expectation that there might be someone at the other end of the transaction to provide support. I don’t know what Google is doing to improve internal, company provided support but they have come up with a way of actively encouraging folks to help out with support in the forum area.

Google has offered a free Nexus to the their top forum contributors (of which I am one) in the markets where the Nexus is currently being sold. I, and a number of other top contributors, received this email on Monday and within 72 hours had shiny new phones:

Hi there,

It is with great pleasure that I write to you today. As you may have seen in the clubhouse, many Top Contributors have asked about the possibility of getting a Nexus One phone.

We have been working to make this a reality for some of you as a thanks for all that you’ve done. I would like to offer Top Contributors located in the United States, United Kingdom, Singapore and Hong Kong the opportunity to get an unlocked Nexus One phone for free.

Please note, this offer is for an unlocked Nexus One phone. It does not include any type of service plan. Adding service to the phone will be your responsibility.

By giving you a phone for personal use, our hope is that you will be able to learn more about the Nexus One and Android operating system first hand and share your knowledge with others. If you meet the geographical criteria for receiving a Nexus One, but you don’t think you’ll be using it, we ask that you do not request a phone at this time. This will allow us to distribute more phones to a wider audience. We’re happy to send you another gift of appreciation instead.

If you would like to take advantage of this offer, please fill out my form located at: XXXX

I know many of you have recently submitted your mailing addresses, but for this promotion, I will be asking for it yet again, to ensure accuracy. Please note, you can add a different delivery address, but we ask that this address be consistent with your country of residence. Thanks for your cooperation.

Thanks in advance for your understanding.

Cheers,
Frankie
on behalf of everyone at Google

John Mu also pointed out in the forums that Google “wanted to say thanks for your work as a Top Contributor and provide feedback on what you like/dislike about the Nexus One”. He made it clear that there was no quid pro quo in the arrangement and that even links back to Google when writing about the program should be no-follow to avoid even the appearance of a conflict.

It is actually quite brilliant if you think about it. Bizarre as a support strategy but brilliant. I have no idea whether it will work to have volunteers as the first line of support in their competition with Apple and other cell phone manufacturers but if it does it will provide Google with significant savings.

Given that the phones are new, there can’t be a lot of expert users yet in the Nexus forums to provide this “support”. Those Top Contributors that received the phones feel both grateful and a certain sense of duty as a result of the gift. Even though they work for free, most are incredibly talented and persistent in their pursuit of answers on Google’s behalf. There is already a very active conversation amongst the recent recipients about features, functions and options. Google is not only getting market feedback from technically savvy folks with customer support experience, they are getting kudos and loyalty from them. Here is one poster’s comments:

My phone arrived today! Wow..Its wonderful..I have set it to the charging point now! Thanks a ton and ton and ton and lots of tons Google! (And Frankie, and all others who made this possible and yea, the Legal team too 🙂 )

You guys rock! Its like a motivation to help the users more and more and more 🙂

I have no idea how many of these phones Google distributed in this way. Obviously, this is not the only market into which free phones were distributed as staff, a number of well know reporters and others also received them

But lets guess that 50 top forum contributors did receive them. Assuming a wholesale cost of $300 (here is a report on tear down costs) , Google will have incurred $15,000 for good will, market testing, some articles and a first line of support. That is significantly less than the cost of single staffer and the support includes enthusiasm to boot.

What will be interesting going forward, is whether Google can in fact provide support levels that retain customer loyalty while actively externalizing these costs. With my iPhone, I dial 611, select #4 and within a few seconds I am usually speaking to a native speaking support person. The two times that I called support, the experience was exemplary but could not have been cheap. Apple has to a large extent, redefined what support means in the technology industry with their desktop and phone support.

If Google can drive the bulk of their support through a no/low cost system, it will provide them with significant margin advantages. Externalized advantages for sure, but an advantage none the less. Ah, the wonders of capitalism.

I, for one, am not confident that it will work. If it does, I do not look forward to future where all support is done by volunteers in forums for if Google succeeds many major corporations in America will follow. Even the shadow of support that we now receive on many products will vanish.

For my part, I will report on using the Nexus for local and with Maps and support issues that I encounter. I, like Miriam, will be exploring it as a developing influence on the SMB market and will from time to time, chime in with my experience using the Nexus. Unlike Miriam, I didn’t have to buy mine (although I have the same expensive plan). If I stopped to figure out what it cost me in terms of time spent in the forums, I am not sure I wouldn’t ask for a refund.