Google CFO Patrick Pichette said Google's Nexus One is profitable, answering one of the pressing questions financial analysts posed soon after the device launched Jan. 5. However, he wouldn't disclose how many of the devices have been sold or other core economics. Broadpoint AmTech analyst Ben Schachter said he estimated Nexus One unit sales at 200,000, contributing $106 million, or 2 percent, of Google's net revenue. That figure stands to increase when Verizon Wireless, Vodafone and Sprint begin offering wireless plans for the device this year.
Google CFO Patrick Pichette characterized Google's Nexus One as profitable,
answering one of the nagging questions financial analysts posed soon after the
device
launched Jan. 5.
Google offers the Android 2.1-based Nexus One unlocked through its Webstore
for $529 or for $179 with a two-year contract from T-Mobile.
Mobile analytics firm Flurry triggered concern about sales of the device
March 16 when it
said that Google sold only 135,000 units of its Nexus One
smartphone through its first 74 days on the market.
By comparison, Apple sold more sold more than 1 million units of its first-generation
iPhone through the same time. Verizon also shipped more than 1 million units of
the Droid through 74 days.
Measured against those gaudy statistics, the Nexus One seemed to be a
failure, and analysts attributed the paucity in interest to Google's sale of
the device solely through its Webstore.
Google executives were upbeat about the Nexus One and Android smartphones
overall on the first-quarter earnings call April 15. Pichette confirmed the
Nexus One was a profitable business, though he wouldn't disclose how many of
the devices have been sold or other core economics.
Broadpoint AmTech analyst Ben Schachter said he estimated Nexus One unit sales
at 200,000, contributing $106 million, or 2 percent, of Google's net revenue.
That figure stands to increase when
Verizon Wireless, Vodafone and
Sprint begin offering wireless plans for the device this year.
Jeff Huber, senior vice president for engineering, said on the call that
Google is "very happy with the device uptake and the kind of impact that's
had across the industry in terms of raising the bar and peoples' expectations
of what a great smartphone can do."
He declined to say whether the phone might be sold by carriers through their
retail stores, but he did claim Android is gaining a lot of momentum. He said
the OS is shipping on some 60,000 smartphones and activated each day, spanning
34 devices from 12 OEMs.
The Android Market now features 38,000 applications. While the number of
Android apps is still a far cry from the 185,000-plus apps in Apple's App
Store, Huber said the number of Android apps is up 70 percent
quarter-over-quarter.
Huber made it clear the goal is to get more people using smartphones and
seeing more mobile ads.
To that end, Google is working on specialized mobile ads, including those
that provide users with
click-to-call options. These business ads feature links
that let users click to call the business to get more information about
products and services.
J. Gold Associates Jack Gold said that while many people are bashing Google
for only selling 200,000 Nexus Ones, analysts should look at what Google has
gained from building the Nexus One.
This includes information for itself and Android developers about mobile use
from applications and ads, as well as feedback on the Google's direct sales
model via its Webstore.
"For Google, it was never about trying to out-compete iPhone or selling
more devices than BlackBerry or HTC or Moto [who
also sell Android phones, but with their 'overlay' on top]," Gold said.
"It wasn't about Google becoming a phone company. It was about Google
getting a significant number of devices out there to form a big 'reference
platform' testing/pilot environment where they could model, test and tune their
ecosystem based on the real life use of the early adopters who would buy Nexus
One."
By testing the market waters with the Nexus One and its new Webstore, Google
laid a foundation it can build on for more mobile initiatives later on,
including more Android phones.
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