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Lessons in Phone Marketing, or Why the Nexus One Is Sucking Wind

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When it comes to selling a lot of a new phones in a fairly short amount of time, an educated customer base, a pre-holiday launch and picking a carrier with a huge subscriber base are essential, according to an analysis released today by Flurry. The provider of high-end handsets app analytics looked at the first 74 days of sales for the iPhone (s aapl), the Droid (s MOT) and the Nexus One (s goog) to see how each had sold in that time frame. It chose 74 days because that’s how long it took Apple to sell 1 million of the original iPhones.

To the Flurry team’s surprise, however, even more Droids were sold in that amount of time, prompting them to come up with the above lessons. The Droid came out two and half years after the original iPhone, so people were primed for a touch-enabled, app-happy handset, and its November launch positioned it perfectly for holiday shopping. Launching with Verizon (s vz) and its 89 million subscribers also helped.  So the moral of this story is that the Google experiment of making a really cool phone with the Nexus One and just tossing it over the fence isn’t working so far.

52 Responses to “Lessons in Phone Marketing, or Why the Nexus One Is Sucking Wind”

  1. what a balls-up!!! A fantastic fone and it sells nowt! Tv advertising is a must and national press advertising. Google of all people should know that everyone skips the ads on the net. That’s the beauty of it, u r not forced into watching it like u r with the tv.

  2. RichardL

    I bought an AT&T-compatible version of Nexus One on Tues. It’s a very nice phone. One login setup. Pop in the SIM from my iPhone and everything works great.

    The overall user experience isn’t quite as nice as the iPhone, but many things are better. Some not quite as good. I think the Android browser with it’s smart-HTML reflow is better than iPhone’s Mobile Safari. That’s a big win. Notifications and multi-tasking are great. Overall I would describe the Nexus One as excellent and completely satisfactory.

    The analogy I make is that the iPhone experience is sort of like a Mercedes C240. The Android experience is sort of like a Honda Accord. Both will run for 150,000 miles and will safely get you from A to B in comfort. Mercedes puts more polish in the sound of door slam.

    Nexus One is losing the retail marketing race for obvious reasons — T-Mobile with expensive contract. Or AT&T or T-Mobile no-contract for $530 sight unseen. (Compare that Amazon is selling DROID with VZN contract for $25.) I really don’t think Google cares. They wanted to provide a way to make sure their flagship phone is available to people who want it.

    The loser in the US right now is Apple being tied to AT&T which is creating a huge opportunity for Android on other carriers.

  3. The truly astounding thing is that everyone assumes that Flurry is a valid estimator based on their monitoring of network software presumably installed on the handsets.

    As I said in Colin’s post – Eric Schmidt said in Barcelona that they are now selling 60K a day (vs. 97K/day for iPhone). Sure, that includes all of Android, and not just N1 – but the only ones who ever tried to sell the “single Android handset must be a iPhone killer” — is the tech press. Certainly not Google.

  4. This article and too many comments talk about the Droid like its one phone from one carrier, Verizon. The Android is a growing global platform. I see an increasing number of Samsung Moment and HTC Heros from Sprint in this country, but ultimately the U.S. is just a fraction of the market. The iPhone is a global phenomena; it’s why Apple launched it on GSM first and AT&T’s mediocre network. Application sales for the Android have rapidly accelerated to be in the same league as the iPhone and that’s the key to a platform’s success. The elegant new design for Palm isn’t even close in sales and Windows Mobile remains just a promise. Android is already now a proven success as a mobile platform, but it needs to expand its success globally to challenge the iPhone.

  5. Hell, you can’t even buy one from their site as a T-mobile customer with the “upgrade an existing line” option. The error returned is “can’t reach t-mobile servers. try again later.” It’s been that way for months as evidenced by Google’s support forums. You’d think they’d fix that error already. Literally dozens of threads chock full of ppl who want to buy a phone but can’t. It’s bizarre – almost like they don’t want to sell any phones.

  6. Sweeney

    Google’s Broadband Experiment+Google’s Fiber+Google’s Android’s App Store+Google’s Android-based phones+Google’s Phone Market outlet+Google’s Location Based Advertising Patent+Google’s Potential Spectrum Acquisition = ???

    Let startup companies lease Google’s fiber and spectrum; keeps prices competitive and low. Win-win for consumers.

    Seems to me that Google has laid the groundwork for some very interesting scenarios in the coming years. Apple might have that walled fortress but Google are the roots. And we all know what roots do to foundations… ;)

  7. Google’s mistake is their arrogance. They thought, they could do anything and it will be a hit. The Nexus One had nothing special, except for the hot air. They should at least have discounted it with add-supported service. So, the real lesson is, don’t underestimate the intelligence of your customers!

  8. This is virtually a re-post of “The Nexus One Needs More Hype” (yesterday-3/15/10), to which I would repeat, maybe it was intentional.

    Just repeating the notion that Google failed, with new stats doesn’t mask the fact that not asking the question of whether or not it has been purposeful (i.e., don’t just go with the obvious) is lazy analysis.

    When you assume that it has been intentional, all sorts of interesting ideas will pop into your mind and fit into place. Events, like Jobs’ tantrum and the $100m Verizon dropped on the Droid push seem to provide supporting context.

    It is an exploration that has been begging to be done by someone good for months now.

  9. completely useless article, with no information whatsover. A graph, a paragraph and nothing to take home.

    by the way when you say droid.. is all the droids? or the motorola droid?

  10. Nexus One is a dog. A Chihuahua. The Droid is a dust and grease collector compared to COMPARABLE iPhones, read 3 GS.

    The iPhone 3GS which is more comparable to these margin wasting bricks. 3GS sold over a million units in three days. Three days!
    These Android apologists make me laugh, what a clueless bunch.

    Android is going to kicked in the groin by iPhone 4 and the coming WM7S (what an effed up name) phones. Android is a synonym for failure. Android will follow the WebOS to oblivion.

    • Rob, you know the US isn’t the end of the Tech-savvy world, right? How’s the iPhone faring in China? India? Brazil? How is Apple going to play its cards to get into those markets?

      Android has the advantage that it can be put on any maker’s handset, from the top of the range (like the EVO 4G) right down to barely-smart phones that will sell millions of units in China, India, Indonesia, Brazil.

      If Android handsets start selling tens of millions in India, Brazil, China and Indonesia, surely you won’t say that it’s been a failure, will you?

  11. Apple is a company that knows what it takes to market a new device. I am not an Apple fan by any stretch, but they are always on the ball and are connected with what people want.

  12. Rashidi

    I agree with most sentiments here. But in regards to the iPhone, one must take into consideration the following:

    The price point of the phone at launch in June 2007 was $599 (8GB version) and $499 I believe for the 4GB version which was subsequently discontinued when the price for the iPhone dropped to $399 in September of 2007. So even though the Droid had more purchases during the first 74 days, the revenue per user is substantially higher. (Two to three times as much)

    Another point to consider is that the iPhone launched without apps, and it didn’t even have a promise for apps, which came almost a year later after users began to hack the device. Droid/Verizon had the benefit of Apple educating the market place on Apps, which one would think considering the iPhone is only available on AT&T, would encourage Verizon customers to purchase the Droid so they could take advantage of apps since they no longer have to wait for their contract to run out. All things considered, I’m not sure if one can label selling 50K units more than the iPhone a success.

    I have a question – does this graph take into consideration the Droid Eris as well?

  13. carriers free phones need to be available in stores where they can be purchased for cash. the no contract/prepay crowd that is mostly to throw big bucks on a new high end unlocked phone is also largely a no online purchase crowd. they like to walk into store pay cash and walk away with a phone in there hand.

    google needs to get the nexus one into retail stores.

  14. sfmitch

    I think the Droid launching on Verizon was by far the single most important fact in its’ success. Verizon has a LOT of people on its’ network that are network loyal = would rather stay on the network and take whatever phone is offered. The Droid benefited from a large pent up demand for a high quality iPhone competitor (the smartphone choices on Verizon, prior to the droid, were crappy).

  15. Santhosh Cheeniyil

    Has it occurred to anyone that it might the network and not the phone? T-Mobile is not exactly the most popular provider out there…

    Let’s wait and see what happens when Nexus One is available on Verizon!

  16. Nexus One is a halo product, designed to show consumers what an Android phone can be, thereby pressuring carriers to let Motorola, HTC, Samsung, etc., to configure phones for optimal customer experience instead of carrier executive myopia. Low sales figures are not a sign of failure here, but AT&T’s hobbling of the Backflip may be.

    • This is the most sensible comment here. Yet again, Google is taking an approach where either outcome will only help them: if Nexus One is a hit, Google is a winner; if Nexus One is not a hit because other manufacturers and carriers made better phones with better features, Google would’ve still accomplished its objectives. We have seen Google play these types of ‘heads, I win; tails, you lose’ games before. The 700 MHz auction comes to mind. We have to be extremely careful before passing snap judgments and jumping to conclusions about Google.

      • Nicely put!

        Nexus One is an experiment that got out of the labs to produce some brain waves among the people that “get it.” And in Europe, it would fit nicely into the way people buy their phones.

        How can GigaOM serve up such contrasts of the same product on the same day (Stacy vs. Kevin’s post)? Sloppy!

  17. HM the Emperor

    The unreal thing to me is that there’s nowhere to see the Nexus One. You can go into Best Buy or the Verizon store or the Apple or AT&T stores to see these other phones. For the Nexus One, you can put your hand up to a buggy Flash animation on a screen.

    While the Nexus One may be the Felicia Day of the phone world, your typical ordinary end-user is not going to splash out on a big-ticket phone that he can’t so much as touch until after he’s paid out big money. I work in the Valley, I know people on the Android TEAM, and I’ve never seen a Nexus One just out for people to play with and get familiar with.

    Like Buzz, it’s another suggestion that somebody in Mountain View’s not crossing the engineer-to-human divide.

  18. joe.attaboy

    Consider this: as mush as I hate Apple and their products, one can’t deny that the marketing on the iPhone has been pretty genius. I remember the day it was first released. I was working a project in Key West, Florida, and the line outside the AT&T store was around the block. You usually have to be giving away free drinks to get folks in Key West to line up for anything.

    That device has also had a three-year lead on the Nexus and the Droid. That can be significant in a market that seems to shift by the minute.

    The iPhone and the Droid both have something else the Nexus doesn’t have: a direct link to a specific carrier. In fact, the lock-down by AT&T/Apple of the iPhone seems to be the biggest gripe most critics have of the device. The Droid has Verizon behind it, but there are other Android devices available from other carriers (including three – the G1, the myTouch and the Cliq – from T-Mobile). A more honest comparison here would have been between the Droid, the iPhone and one of those carrier-branded devices. In fact, the better comparison would have left the iPhone out, since it uses a different system all together.

    Lot of people believe that what Google did with the Nexus is really the future of cellular equipment in the US (as it frequently is in Europe now). Eventually, we’ll have phones which will work on both network types, and users will be able to buy where they like (as in shopping for price) and use the device with any carrier. Even with only the (US) choice between two carriers, it still provides a small modicum of choice and a picture into the future.

    The shame of it is that the two GSM carriers use different frequencies for their 3G. This would make roaming (or choosing a carrier) so much easier.

  19. The point missed here is that Google is changing the cell phone business model upside down, right now you look for a service provider and then select the phone, what Google is saying pick a phone first and then look for the service provider thus the reason their phone are being sold on the web.

    • Well… when iPhone will be available in US with multiple carriers (like it is in other countries), what would be the advantage of the “upside down” approach? You can already by the iPhone in the States without contract + iPhone @ Verizon and T-Mobile will make Google’s business model irrelevant. I am sure when Nexus One will sale lot more units when available on Verizon network. But again, Microsoft is entering the game and it is more likely that Google will suffer the consequences than Apple, which is way ahead…

  20. I don’t see the Nexus One as being a failed experiment. Considering that both the iPhone and the DROID had massive TV advertising campaigns while the Nexus One has had minimal advertisements to the general masses.

    135K units at $529 minus a $175 parts cost (taken from Engadget) is around $350 in profit per phone which comes to $47,250,000 total. Granted this doesn’t take in money paid to HTC for time/materials, but you get the general idea.

    Regardless of actual profit numbers, I would personally like to have 135K paying customers on anything I do.

      • Define “failing”. Which is a better predictor, Flurry’s best guess at the first 74 days based on sniffing the browser air, or Eric Schmidt saying a couple weeks ago that they are now selling 60K worth of Android handsets/day?

        The market is quite big enough for iPhone and Android to be successful, despite everyone’s desire to make it either/or.