Nexus One: Is Google pushing away from smartphone sales business?

Nexus One: Is Google pushing away from smartphone sales business?

Summary: Google has shifted gears on its newest smartphone for Verizon in a way that suggests it may be backing off of its effort to sell directly to the consumer.

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Back in January, Google made a splash over the Nexus One smartphone - summoning the tech press out to the Googleplex for an introduction to not only the device itself, but also a new way of selling it.

You see, Google wanted to reinvent the way consumers shop for and buy cell phones. Pushing away from a model where specific devices are tied to certain carriers, Google had this vision of selling its devices directly to the consumer and then giving them a choice on which carrier to use.

It was a valiant effort but was flawed right out of the gate. First, there were questions galore on who would handle offline sales, support and service - Google certainly wasn't equipped to handle that. Then came the rumblings over what was perceived to be double "early termination fees" - those imposed by the carriers and a separate that would be charged by Google.

Google lowers Nexus One return fee - but is it enough?

Now, the company has quietly made one change to its Nexus One online store that suggests - for those of us trying to read deeper into it - that Google may be backing away from its push into the online smartphone sales business. (Techmeme) For months, its site has been pitching the Nexus One for Verizon as a "Coming in Spring 2010." This morning, the language was changed to read: For Verizon's network, you can buy the Droid Incredible by HTC, a powerful Android phone and similarly feature-packed cousin of the Nexus One.

Below that, there's a link that sends visitors to Verizon's website to place a pre-order.

Also see:

Here's hoping that Google finally saw the light and decided to rethink the strategy. One of its biggest flaws was that Google, as a retailer, was becoming a competitor to the carriers that it was also partnering with. The other big problem was that the unsubsidized device carried a price tag that clearly wasn't going to resonate well with consumers - $529.

None of this is to suggest that the current system of mobile phone sales, support and service is model is the perfect system that doesn't need changing. It's gotten better - but consumers do want more freedoms when it comes to buying mobile devices. If those sort of freedoms were in place, I would have bought an iPhone for my Verizon plan years ago.

Instead, I've completely lost interest in the iPhone and instead will likely walk into a Verizon store to pick up a Droid Incredible later this week. And I'll be relieved to actually buy it from a real person and walk out of store with one, instead of clicking on a "Buy Now" link and then waiting for a UPS driver to deliver it later.

There's no shame in trying to rock the boat a bit and Google gave it a good shot. There really wasn't much risk, given the overhead involved with the online store model, so Google didn't have much to lose. Pouring some cash into a marketing or advertising budget might have helped - after all, it helped the Droid gain some traction - but that alone wasn't going to make the online sales model work.

Google needs to stay focused on doing what it does best - enhancing a smartphone OS that will give the iPhone a run for its money, building that app developer community and cutting deals with a variety of device manufacturers and carriers.

That alone rocks the boat enough for me to want to jump on-board.

Topics: Smartphones, Google, Hardware, Mobility

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20 comments
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  • RE: Nexus One: Is Google pushing away from smartphone sales business?

    The article assumes Google was initially interested in
    becoming a consumer electronics company instead of
    looking for ways to push Android adoption. Google has
    repeatedly claimed that it's not interested in selling
    phones, only in pushing the bar for Android phones, and
    with Verizon carrying the HTC Incredible, there's no need
    for Google to compete with HTC on Verizon. AT&T still has
    no decent Android offering, so Google's AT&T version of
    the Nexus One is still the best chance anyone on the
    network has at getting a decent Android experience.
    alangerow
    • Why else would they do it, then?

      [i]The article assumes Google was initially interested in becoming a consumer electronics company instead of looking for ways to push Android adoption[/i]

      I disagree. I would imagine that Google took a bit hit on this, having the phones designed, manufactured, tested and shipped for no other reason then to "push Android adoption".

      It was doing fine with companies like Verizon and what not selling phones with Android.

      IMHO, I think Google believed their name alone would somehow propell the Nexus One ahead of the pact, even going so far a labeling it a "superphone", and that it backfired.

      People equate Google with search, not cell phones, just as they equate Verizon with cell phones, not search.
      John Zern
      • No, Google made good money on Nexus One. HTC ALREADY had lots of experience

        with Android phones, so it was NOT a from
        scratch development effort. HTC was ALSO free to
        use everything they learned from Nexus One for
        other phones, which the did, making and even
        BETTER phone for Verizon, the Droid Incredible.

        Very smart for Google!!
        DonnieBoy
  • USA: No consumer benefit...

    Wow, I can buy an *unlocked* Nexus One,...that only works on T-Mobile USA. Such freedom! (grin)

    (And if a Nexus One for Verizon would have been released, it would have only worked on Verizon's network.)

    As a practical matter, T-Mobile allows customers to unlock any of their phones after 40 days.

    And buy buying directly from Google, you get the "benefits" of poor customer service, poor technical support, and the inability to touch the phone prior to purchase.

    No thanks...
    Tom12Tom
  • RE: Nexus One: Is Google pushing away from smartphone sales business?

    You get the benefit of having the best android experience currently available for t-mobile. Thank you google :)
    Mr.Daniels
  • RE: Nexus One: Is Google pushing away from smartphone sales business?

    I wonder why they didn?t try for a larger retail presence? A partnership with Best Buy or, dare I say, Wal Mart combined with some effective advertising would have propelled this device a bit further.

    I think what many of us were waiting for was a phone that was not linked to any one carrier, and one that could prove that device costs were inflated throug a more reasonable retail price. But, if they sent this to market at a narrower margin, they would have certainly pissed off their partners in the space and that might have backfired. So, the question remains, how much do these smartphones actually cost? And how much of that cost is inflated to justify high plan rates under 2 year contracts. I still say there is a racket here.
    djmik
  • RE: Nexus One: Is Google pushing away from smartphone sales business?

    In Germany you can do both.

    Search & compare smartphones online and then decide to go to a local retailer / system house to get it there (or buy online and just let it deliver to the store if it isn't already in stock).

    http://www.google.de/products?q=blackberry+site%3Ab2c.silicon.de&hl=de&aq=o

    Google should have done it the same way: give the Nexus one to the distribution channel and sell it indirectly but still promoted heavily on the web.

    The funny thing: Google promotes hundreds of stores in their product search that selll competing products this way (e.g. blackberry), but wasn't able to leverage their own technology to sell their own product.
    thomas.wingenfeld9
    • Bing,bing,bing,bing,bing!

      We have a winner here.


      "The funny thing: Google promotes hundreds of stores in their
      product search that selll competing products this way (e.g.
      blackberry), but wasn't able to leverage their own technology to sell
      their own product."


      The last part of that paragraph says it all. Google was not able to
      leverage their own technology to sell their own product. Currently
      Google is being probed as a Monopoly, that is looking to leverage their
      search to get into many other areas of tech. Watch out Google or you
      will be the next MSFT.
      Info4Sherlock
  • Given that Google likes to throw things at the wall and see what sticks,

    they had to do it. But, in any case, the Nexus One was the
    inspiration for the Droid Incredible, so, Google was able to
    influence phone design the way that the wanted it. And, that
    influence cost Google nothing, they even made money from it.

    Expect to see the same thing with tablets. Google will pay
    HTC, or some other company to design the tablet around exactly
    what they want, then let that same company sell similar
    versions to all takers. At the same time, Google will make a
    little money, and influence the tablet market in the direction
    that they want. It ALSO helps then really think about the OS
    features in depth having to design their own tablet in house.
    DonnieBoy
    • DB, why do you incessantly spin, or makeup

      stuff whenever a Google product flops or is ridiculed? Why the need to make excuses and stories for another Google failure?

      Someone already posted here last week that Google said they lost money, yet here you are claiming "the Nexus One was an [i]inspiration[/i] and that [i]they even made money from it[/i]

      Can't you just accept the fact that Google has it share of failures too, or is the truth something your mind won't allow you to accept?
      John Zern
      • It actually was NOT a Google failure. Google ONLY cares about

        getting lots of Android phones in the hands of
        consumers, and pushing the envelope on phone
        design. If you would take a second to read, you
        would understand that Google actually made money
        on this, so it cost them nothing.
        DonnieBoy
    • Isn't that how MSFT got in trouble?

      By pushing up on other companies. Well time will only tell?
      Info4Sherlock
      • Google contracted HTC to make the phone, AND also let HTC use the

        technology in other phones. Thus the Droid
        Incredible, which is even better than the Nexus
        One.
        DonnieBoy
  • Well, Google was able to influence phone design the way THEY wanted, AND

    in the process made a little money.

    Pretty smart!!
    DonnieBoy
    • They influenced nothing, lost money

      all in all, not too bright.
      John Zern
      • Actally, they made VERY good money on the Nexus One, AND, HTC turned right

        around and used the same design as a basis for
        the Droid Incredible.

        They will do the same for tablets.
        DonnieBoy
        • They did not, Google said it themselves

          that they had to write it down because they eastimated 350,000 right off the bat, yet sold only around 160,000 the entire run, so that doesn't sound anywhere close to "VERY good money".
          John Zern
          • No, Nexus One is profitable, read here:

            http://phandroid.com/2010/04/15/38000-apps-in-
            the-market-nexus-one-bringing-in-profits/
            DonnieBoy
    • PROOF!

      Links please. I can say whatever I want to also, but if I must, I will back it
      up Donnie.
      Info4Sherlock
      • Read here for one, but, it was widely reported that Nexus One is profitable

        http://phandroid.com/2010/04/15/38000-apps-in-
        the-market-nexus-one-bringing-in-profits/

        Why does that bother you?
        DonnieBoy