Google Nexus One Not a Failure Despite Slights by Sprint, Verizon

By Clint Boulton  |  Posted 2010-05-12

Google Nexus One Not a Failure Despite Slights by Sprint, Verizon

Analysts have varying opinions about whether Google's Webstore is a failure in the wake of Verizon and Sprint's decisions to nix the Google Nexus One smartphone on their respective networks.

Sprint reignited the theme May 10 when it confirmed it would not support the Android 2.1-based Nexus One on its network. The company told eWEEK it wanted to concentrate its efforts on selling the Android 2.1 HTC EVO 4G this summer.

Sprint's move came two weeks after Verizon Wireless decided it would nudge aside the Nexus One and instead market the HTC Droid Incredible, a device that boasts the same Android 2.1 OS and Qualcomm 1 GHz Snapdragon processor.

But that was before Verizon and Sprint reneged on the pledges to support the device. Now the prevailing water cooler debate is whether or not the Nexus One and Google's Webstore, as the smartphone's sole delivery channel, are failures.

Some experts see the device and its delivery model as casualties of carriers' reluctance to support a device they can't sell through their own retail channels. Verizon and Sprint, in effect, thwarted Google's plans to disrupt the classic carrier distribution model.

Others, such as IDC analyst Ramon Llamas, don't see Google's Webstore as a failure because it's not the end goal where Android is concerned.

"Take a look at other companies who went that route (HP for instance), and you'll see that Google did a great job selling Nexus One units. Did it sell millions of units? No, but it did better than other companies. And, it outlined a route to include carriers eventually.

Google CFO Patrick Pichette said the Nexus One was profitable. Analysts said Google sold 200,000 to 300,000 units of the device, or a fraction of the 1 million-plus Motorola Droid units Verizon sold. 

"What consumers want is not to just see the device and learn about it. They also want to experience the device, and that is where carrier/consumer electronics stores/branded stores (think Apple) are vital to selling more units," Llamas added. "Makes you wonder what would have happened if Google had its own retail stores. Besides, selling millions of units was not Google's end game. It was to help champion the Android platform and experience."

Independent analyst Jack Gold echoed Llamas' thoughts, noting that the average life of a phone is only about 9 to 12 months anyway and the Nexus One is getting up there.

Not Everyone Gives Google a Pass

"I don't think Google ever really wanted (or needed) to sell millions of phones. For them it was about getting an early kick start to the market and they did that by selling a couple hundred thousand. I think they would be happy to have HTC and Moto carry the ball and get Android phones out there in big numbers.

"Also, remember that most carriers want a customized version of phones with their own app load and modified UI, and Nexus One did not offer that. HTC will provide that for the carriers, as it has done often before."

Not everyone agrees with Gold and Llamas. Forrester Research analyst Charles Golvin said Google's retail phone effort is indeed a failure to date, noting that consumers in the United States just aren't ready to buy phones sight unseen.

"I think [Google] had two purposes - to begin to alter the retail model for phones, and to provide an exemplar of what Android could do. I don't think U.S. consumers are ready for the retail change (though things are indeed changing with the expanding prepaid market), and other devices like the Incredible are eclipsing what the Nexus One can do."

Golvin also noted Google did little-to-no advertising of the product, which was a large contributor to the device's lack of uptake.

In that light, it's fair to ask why Google would think carriers would support an Android device whose sale it can't control when it can just contract to have phone makers build phones on the open-source platform.

Golvin said Verizon and Sprint simply want to test the waters of alternate retail channels, and any sales that result in contract renewals or acquisitions are a bonus.

"Verizon Wireless definitely plans on having Android be a big part of its strategy, but also wants to control the ecosystem," Llamas said. "Same story with Sprint, In the case of T-Mobile, it supports the Nexus One, perhaps due to the revenue data potential, and that users might be interested in other Android phones (MyTouch 3G, G1, etc.)."

Despite his reluctance to deem the Webstore and Nexus One failures, Llamas expected more from Google's new initiative.

"What I was looking forward to was how Google would have been able to control its own destiny as owner of hardware and software similar to RIM and Apple," Llamas said. "Those two companies have been successful in launching devices and updating software, while building their respective brands."

Regardless, it is clear the Nexus One has been cannibalized by HTC's Droid Incredible on Verizon and EVO 4G on Sprint.

While both feature the same operating system as the Nexus One, the devices boast other perks and features that make it a step up from the device they are replacing on the Verizon and Sprint networks.


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