T-Mobile challenges Verizon’s Pixel phone exclusive with $325 discount for unlocked version

Google's Pixel

T-Mobile said it will offer $325 to customers who purchase an unlocked version of Google’s Pixel phone and then activate it on the carrier’s new T-Mobile One unlimited data plan.

“If you think you can only purchase and use the Pixel on Verizon… that’s simply not true!” T-Mobile said in a press release. However, terms of the offer by T-Mobile prevent customers from combining the discount with other offers like T-Mobile’s “Carrier Freedom,” and the offer is limited to eight devices per account.

Nonetheless, the offering is noteworthy considering Google said Verizon was the “exclusive” carrier for the Pixel when the company announced the new device earlier this month. At the time, Google said the Pixel with the 5-inch screen would go for $650, while the Pixel XL offers a 5.5-inch screen and starts at $770. Verizon started selling the phones Oct. 20, and offered a free Daydream, Google’s $80 virtual reality headset, to users who preordered the Pixel.

However, an unlocked version of the phone is also available, and the phone can work on T-Mobile’s network. “Don’t let the ‘exclusive’ advertisements fool you, the Pixel phone is tested and proven to be fantastic on our lightning fast network,” John Legere, president and CEO of T-Mobile, said in a release announcing the offer.

Verizon’s representatives quickly took to Twitter to counter T-Mobile’s action. “Why is Google's Pixel better on Verizon? Verizon LTE Advanced, in more than 450 markets, w/ 50% faster peak speeds,” noted Verizon’s Kelly L. Crummey. “Pixel on @Verizon means access to tri-band LTE Advanced with sick speeds at peak hours. You can't match that. #betteronverizon,” added Verizon’s George L. Koroneos.

Google’s Pixel and Pixel XL are powered by Qualcomm’s Snapdragon 821 processor and run Android Nougat 7.1, and are available in three colors with 32 GB or 128 GB.

Of course, Google may well tacitly appreciate T-Mobile’s new promotion as it likely could accelerate Pixel sales during the crucial holiday shopping season. Already the Pixel likely will receive a boost from Samsung’s ongoing troubles at the high end of the market following the company’s disastrous recall of the Galaxy Note 7, which continues to suffer from defects that can cause the device to explode without warning. As a result, Samsung has discontinued production of the device, which could open sales of competing devices like the Pixel and the Pixel XL.

Moreover, T-Mobile’s ongoing momentum in the wireless market likely could create increased demand for the Pixel if large numbers of customers opt to take advantage of T-Mobile’s new discount on the phone. After all, T-Mobile in the third quarter reported adding 851,000 net postpaid phone customers; the carrier also raised its 2016 guidance for both subscriber growth and adjusted EBITDA.

(Interestingly, T-Mobile also noted that 80 percent of its new postpaid phone customers are acting on its T-Mobile One unlimited offering.)

Analysts also expect T-Mobile’s momentum to continue into the fourth quarter. “While T-Mobile’s 3Q results were largely a mirror image of prior quarters (i.e., net adds beat, lower churn, improving margins, etc.), that doesn’t make them any less impressive particularly when taking into account the heightened competitive backdrop,” wrote the analysts at Barclays, an investment banking firm, shortly after the release of T-Mobile’s earnings earlier this week.

Article updated Oct. 27 to correct information about T-Mobile's offer.