Blog Post

4 Lessons Learned From Google’s Nexus One Store Closure

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Google plans to close its online retail store for the Nexus One handset in the U.S. and instead pursue the mobile operator retail model it uses in Europe with Vodafone (s vod). And as available inventory spreads worldwide, Google (s goog) will morph its web storefront into a showcase for information on a wide range of available Android handsets. What was once a cannon shot across the bows of the U.S. carriers meant to change the way consumers purchase phones is now a small rubber bullet falling short of its target.

There’s a few lessons to be learned in the overall Nexus One experiment. With perhaps 200,000 Nexus One handsets sold since early January, the web store closure indicates that consumers aren’t ready to purchase a new handset sight unseen. While there are several online venues where one can purchase a phone — Amazon (s amzn) and Wirefly come to mind — all of the phones available online can also be found in brick-and-mortar stores, where consumers can get some hands-on time with them to help decide which model they is best for them.

Then there’s the marketing issue — there really wasn’t any. Sure, there were Google ads on the web, but no mainstream U.S. media outlets carried ads showing off the phone. How else would a potential customer even know the Nexus One was available for purchase? Contrast that with the $100 million ad campaign that Verizon sunk into the Motorola Droid launch and it’s easy to see why the Droid outsold the Nexus One by a factor of nine in the first 74 days it was available.

Finally, it seems clear that the majority of U.S. consumers still aren’t ready to adopt the unsubsidized handset model that Europe and other areas use. People here gripe about their 2-year contracts, but aren’t willing to go contract free by paying full price for a new handset. I’m done griping, as evidenced by my own purchase of a Nexus One for $529 in January. I have the freedom to switch phones or carriers without an ETF, or Early Termination Fee, and I pay $20 a month less for my plan than a subsidized customer does for the same plan. Either I’m still in the minority or I was raised in Europe in a past life.

All those lessons aside, the one factor that Google isn’t talking about  in today’s announcement is how its Android partners reacted to competing with Google. Essentially, that’s what happened the moment Google announced its own phone — it set the stage to upset the very partners it needs for Android. And without happy partners, Google can’t continue its assault on Apple (s aapl), Nokia (s nok), Research In Motion (s rimm) and others in the mobile space. For that reason alone, pulling the plug on its Nexus One store just might be the best thing to happen yet for Google in the ongoing Nexus One story. Given that there are now 65,000 Android phones shipped daily, the partner relationships were really all Google had to lose in the first place.

Related research on GigaOM Pro (sub req’d):

Google’s Mobile Strategy: Understanding the Nexus One

79 Responses to “4 Lessons Learned From Google’s Nexus One Store Closure”

  1. David Crew

    I’m just happy with having a basic phone with a low monthly fee that is very manageable to pay, and having an ipod touch for productivity and mobile utilities. Overall I save more money than having to drop terrible amounts of monthly payments on a phone that can rule a small country, and frankly, it works much better imo.

  2. Cyco Ryder

    the writer should learn to proofread his work and make corrections before release.. :(

    “where consumers can get some hands-on time with them to help decide which model they is best for them”

    and you want us to take you seriously??

  3. i was contemplating getting one of these phones as i heard the noise cancelling was very good and the custom rom experience was among the best, also along with getting the latest android updates. I wonder if anyone apart from vodafone is getting the nexus one in the UK….

  4. Lennart

    Hi Kevin,

    I’m from Germany and I can tell you that most customers over here also go with 2-year-contracts plus subsidized phones, especially when they go for an expensive smartphone. I think there are still millions of customers in Germany who don’t even know that you can have something that’s called “post-paid” over here, meaning that you have no fixed duration of a contract. Most believe that you either have a 2-year-contract with a basic fee or some kind of flatrate – or a “pre-paid” deal without any obligations. And I guess that 98% of all customers believe that cell-phones are cheaper with a 2-year-contract. In fact, it’s the opposite.

    All I’m saying is: Europe, or at least Germany (Europe’s biggest market), isn’t that different from the U.S. market in this respect.

    By the way, I kind of did the same as you. I bought an unsubsidized HTC Tattoo and use it with a cheap “post-paid” deal that I can cancel whenever I want.

  5. What I have learnt from this is that “Personal touch still matters!”. Even in this high tech world nothing can replace the need of touch, see and feel anything before buying. Surely I buy books online directly without even looking at it in the store. But for things like clothes everybody would really like to feel and see how it looks on him. For all electronics, nobody would love to buy anything before playing with it at a store.

  6. Rob Scott

    People bought the iPad without ever touching or seeing it. There was no huge marketing campaign either.

    Stop making excuses for Google. They failed period. The Nexus One is a joke as far as sales are concerned even compared to other non subsidized devices like the iPad.

    Nothing is surprising about Google’s failure, they have failed more times than they been successful. Count the products they launched.

  7. Hamranhansenhansen

    it seems clear that the majority of U.S. consumers
    still aren’t ready to adopt the unsubsidized handset
    model that Europe and other areas use.

    The reason for that is pretty clear: there is only one standard GSM carrier in the US, which is AT&T. Who are you going to switch to? No matter what phone you use, it will only run on 1 of the 4 US carriers.

    If Verizon was also a standard GSM carrier, then buying a GSM phone and switching between Verizon and AT&T at will would be a feature. If you have to get a whole new phone anyway, you might as well pay AT&T’s low $175 termination fee.

  8. “People here gripe about their 2-year contracts, but aren’t willing to go contract free by paying full price for a new handset.”

    Hmmm… From MSNBC today:

    “Together, the seven largest U.S. wireless carriers expanded their contract subscribers by just 230,000 people in the first quarter. That’s negligible compared to their entire customer base of 280 million.

    Prepaid service, meanwhile, attracted about 3.1 million new subscribers to the seven largest carriers in the quarter. (That does not include an additional 1.1 million accounts that AT&T Inc. counts as prepaid but are serving devices that aren’t phones, such as e-book readers.)”

    By Peter Svensson, AP

    I had high hopes for the Google experiment. The first disappointment was the cost of the phone. Google makes money from advertisements and the information it collects. Yet it forgot all that and decided that to make money on the phone. Google could have sold the phone at cost and still made money with its business model, yet decided not to.

    The second disappointment was customer support, or lack thereof. They should have taken a cue from Amazon, which goes to great lengths to make good by their customers even when it involves there partners. A very generous return policy would have totally compensated for the “sight unseen” perception.

    Finally, Google never totally divorced the Nexus One from the carriers as the phones were still tied to a specific carrier by voice or data frequencies. It’s possible to build a phone that works on all frequencies in the U.S. configurable by SIM card insertion or totally in software for a specific carrier. By not giving the Nexus One this capability, Google conceded ultimate control to the carriers.

    I’m not prepared to say that American consumers aren’t prepared to do this or that. I will say Google and the Nexus One weren’t up to the task of giving them the chance.

  9. Nexus One could have been number 1 top selling phone if Google had decided to disrupt the market by selling it $199 unlocked and with free unlimited Google Voice on VOIP. The phone costs $150 to manufacture, and Google says they don’t want to profit on hardware sales.

    The decision Google made was istead to treat the Nexus One as a development kit for Android 2.1, available to all early adopters online.

    Google also decided to release it without disrupting HTC, other manufacturers and the carriers business models. HTC got to keep all the profit per phone sold and also got to use the same core hardware design and components for HTC Desire and Droid Infredible.

    In the next few weeks, se veral new phones are arriving to the market, not just new models by HTC, Samsung (with Super AMOLED) and Motorola Droid2, also about 50 other manufacturers are joining the Android party. Lenovo, Dell, Acer, Philips, Huawei, Hisense, Kyocera (= Sanyo = Panasonic), Sony Ericsson, and many Android tablets and smartbooks are coming to the market as well. Google can’t be seen as competing with all that, and don’t want to have to choose which designs to sell on its online store, thus insulting the manufacturers who are not the chosen ones.

  10. @Kevin – I think you write more coherently about Android than most – I agree with all of the above with one exception: Google potentially upsetting it’s partners with N1. Who exactly?

    Maybe Motorola, but they have likely sold more Android phones than anyone at this point. Not Samsung, they have so many models that they shouldn’t care. Certainly not HTC – HTC owes it’s meteoric rise to Android as much as anything, and certainly leveraged that into the Incredible and the EVO.

    The carriers? Doubt it – as you say frequency and the CDMA/GSM duopoly give them virtual lock-in anyway. Maybe when we have VOIP over nationwide 4G that playing field will be level.

  11. Stuart

    Google had enough clout to do something really different. They could have first of all gotten all their ducks in a row and offered the Nexus One on all 4 networks at the same time. Or they could have tried something different and made a GSM/CDMA phone. If Gobi can have both GSM and CDMA data and make it easy to activate on a laptop, Google could have looked into that and made a way for 1 device to be workable on multiple carriers. The CDMA carriers have international versions that have GSM for overseas travel and they could have done that. Or they could have done what Nokia will do with the N8 and have all 5 3G bands so a move from T-Mobile to AT&T (or vice versa) would not mean giving up a high speed connection. Any of those things might have made the Nexus One truly remarkable. As it is, it is just a GSM phone where you have to decide which carrier you want before you decide which version to buy.

  12. I definitely think the lack of ability to actually feel and test the phone in an actual store was a huge drawback.

    If I’m going to sink over $500 into a phone, I really want the ability to touch it first.

  13. for me it was disappointing that a great phone available unlocked without contract had to be purchased online. i would think that people who wish to pay full price for an unlocked phone are also people who tend to pay cash in stores not use credit cards online.

  14. When Google lunched the phone sotre, I was thrilled that they would eventually change the biz model from selecting your carrier and then selecting the phone to select your phone and then your carrier so that it would help users get away from contracts that tie you down
    I guess where they failed was with the marketing, they could have dropped the price a bit and market the hell out of it to user in a new way of buying a cell phone. This is where Apple does a good job as they know how to change models and become successfull at it

  15. There is that other lesson…Google isn’t all that and a bag of chips, they don’t collectively walk on water and they’re a for-profit corporation just like every other for-profit corporation on earth.

  16. I’ve said this for over a year now, but the US really needs a third GSM provider to open up competition and provide coverage on the 2100MHz band. CDMA has proven itself to be an inferior technology for today’s smartphones, whereas GSM has been adopted and standardized worldwide.

    • Simply not possible in the short to medium term, the spectrum is already allocated. CDMA the modulation technique turned out to be quite superior to what GSM used, so UMTS (GSM 3G) uses CDMA on its spectrum. Now, the protocol standard that Sprint and Verizon use, apparently there’s some deficiencies, though there didn’t have to be. Your GSM phone is able to talk and data simultaneously because it has more than one radio in it, i.e. brute force.

      LTE might finally get everyone on the same page, and LTE was designed to be flexible about spectrum slices. Though Sprint seems to be off the reservation with WiMax…

  17. I have a Nexus One because it was the best option at the time and I hate contracts. Plus, I like the Free monogram. It has my name on it instead of some companies. In addition, I hate that in the store some kid is the first to touch my newly opened phone. Google had the model right and it is sad to see it go.

  18. I have to wonder how many people did return this phone. I have used this phone first for a review and then as a replacement when my Blackberry Bold died. I have to say, I don’t quite care for it very much. It doesn’t quite stack-up against the newer Androids — INcredible is actually pretty solid. I am not a big fan — I was when the phone was released and said as much in my review (based on one week’s usage.)

    Sustained usage makes me realize how much work HTC has done in making Android human and usable.

    • Om, I liked my Nexus One out of the box, but I absolutely love it with the HTC Sense user interface added by rooting the device and installing a custom ROM.

      +1 to HTC for Sense and +1 for Google making it easy to root and tinker the Nexus One. I currently have three different ROMs on the microSD card and can literally transform my phone into a different device in < 10 minutes.

  19. One more thing. I can’t even buy an unlocked phone in Europe and just use that. For one thing, everything is more expensive in Europe but more importantly none of the phones here have the US 3G frequencies.

  20. sfmitch

    USA centric opinion….

    My take is that subsidized phones are a better way to go. Until the US has multiple carriers using the same cell standards, there is no handset portability. There is nowhere to go with that unlocked / unencumbered phone.

    I think I come out ahead buying subsidized phones every 18 months (or so).

    • richard

      That’s the “upgrade my computer, it’s slow” model…

      Thankfully, hardware is hitting a real sweetspot; and with the growing functionality of cloud based phone services it will some be time for the “attack of the clones” (or cloudphones).

      Offloading processing to centralized hardware with truly dynamic local portable displays is the change…you shouldn’t really need to upgrade the frontend (ie, the phone) to get performance improvements out of the (1) network and (2) backend…

      Without the “perceived” need to upgrade my handset every two years, the market will change as more people go “off contract” for the third or even fourth year, satisfied with their initial hardware (handset). Of course, that will be a few years down the road…but I can see the lights coming closer.

      • pb1994

        As much as I wish this were the case, I think its actually much the opposite now. At least for smart phones – and especially in the Android space. The hardware is a significant limitation to what these phones can do at the moment, and for the foreseeable future, we will most likely get processor/ram/power consumption upgrades every 6 months. I mean just look at how much things have changed in the last year…

        Also, most people are pretty tough on their handsets. They drop them, get them wet, crack the screens, etc… the “new every 2” model is attractive because by the time your phone has taken a beating, you can get new kit. And even if you haven’t broken your phone by the end of the 2 years, cell phones have enough fashion value that most people will want a new one.

      • Hamranhansenhansen

        75% of Android phones are born, live, and die with the same Android v1 on them. If you ask the carrier for an update, they tell you “buy an Android v2 phone”.

        So we are a little ways off from the cloud bringing you updates that prevent you from needing a new phone.

        And the cloud is not going to bring you fresh batteries, a 4G antenna, a higher-res screen, etc.

  21. I, for one, am very happy to have an unlocked N1 in my pocket. Traveling back and forth between Europe and the US really makes such a device a must. And I hate the fact that I cannot buy a phone if I want to. I have to sign a contract, break a contract, pay a fee, beg them to unlock (maybe they will, maybe they won’t) maybe lose my warranty. I hate it.

    I don’t care if it is stores but PLEASE sell it to me without the bullshit if I want to buy it. I know I am in the minority, but…

    Of course, the other problem why an unlocked model won’t work is the service providers. For GSM there is literally no pre-pay plan that gives you data. (And I mean data for smart phones, like as you so often say, data is not data or something independent of the type of device.) I can go month to month but I don’t want to go in start up such a plan for 10 days in the US, just to have to start one up again with another number a few months later.

    Right now I am stuck without data (or I roam $$ with the European chip). I’ll be in the US a bit more in the next year and a half so I’ll get on a family member’s plan and have it switch on and off when I am gone for a longer period of time. But it is still bullshit. I can’t buy a phone, even if I wanted to, for ridiculously high price. I can’t buy a service for ridiculously high price. What gives?

    And if Google sold an unlocked CDMA phone. Could Sprint or Verizon simply say I won’t activate it. Of course they could.

    Alright. Rant over.

      • richard

        Actually, I don’t think it did. I for one have no use for Apple, generally speaking… But I bought (and love) an iPad. It’s the hardware more than the software.

        Sure the marketing will kick in…but the early adopters are a different segment.

    • Hamranhansenhansen

      Yeah, I think there is too much excusifying for Google. There was a huge amount of “Google Phone” hype before the launch and it fell totally flat when people saw what was actually being offered was just another Droid, except without the Verizon and the subsidy.

      I thought the announcement that they’re closing their Web store lacked an “oops.” Doesn’t matter how big or smart you are, when you fall flat on your face it’s actually better to say “oops” than “I meant to do that.”

      Is Google in mobile for real, or is it just a hobby? When something goes well they say “for real” but when something goes bad, “it’s just a hobby … they’re doing a test.”

      200,000 Nexus One in 6 months? Apple sold 20,000 iPads in their very first hour of pre-orders, when nobody had seen or touched an iPad.

      I don’t mind that these companies are playing different games. But I do mind when people try to pretend they are when that’s convenient and are not when that’s convenient.

    • Scott

      I don’t think the iPad is a fair comparison for the Nexus in that regard. The iPad sold sight unseen to a lot of people who have never owned or possibly even seen or touched a tablet computer before. The Nexus, on the other hand, is a smartphone, which meant that it was trying to enter an already-established device market, and one into which a high-end, well-marketed Android phone had just been released. I think that instead we should take the example of the Nexus and use it to make some predictions about possible fates for Android tablets like the Notion Ink Adam, which is hotly anticipated in geek circles but virtually unknown otherwise.

  22. I use a AT&T sim in a TMobile N1 and don’t miss the 3G data at all. The Edge data is still decent speed, and where it’s not, I have wifi. I’ve had AT&T 3G before, and I really don’t notice a different.

  23. modelportfolio2003

    Kevin, like you I am a happy Nexus One buyer and I live in UK and bought phone unlocked (SIM free) for $ 529 plus import tax. Six GSM carriers here compete for my monthly rolling contract (no long term contract—just 30 days notice and I am free) and I pay between $ 23-30 per month, depending on which carrier I choose (Vodafone, Orange, O2, Virgin, T Mob, 3) for 600 talk mins and unlimited text and unlimited web. That is a lot cheaper than the savings mentioned by Alan in the response.

    Really it is a sad day that the US consumer gets screwed again by the monopolist carriers–Verizon, Sprint, ATT. I do not need nor want my hand held by their commission salespeople who know less than I do about phones. They have to support this expensive, legacy infrastructure and managed to thwart Google. Hence US consumers locked into expensive smartphone deals for 2 years while technology changes.

    • You got screwed too, $529 for an unlocked Nexus One is way too much profit margins considering the phone costs $150 to manufacture and Google has said they don’t want to profit on hardware.

      My guess, HTC gets all the profits, gets to decide the price unlocked, and HTC has telecom customers who actually decide that price unlocked has to be kept over 300% of manufacturing cost. Also, I think Google gave HTC all rights to “clone” the Nexus One in HTC Desire and Droid Incredible.

      • Hamranhansenhansen

        Nexus One has double the processor speed and double the RAM from a typical smartphone, and it has an OLED screen which I am personally not at all impressed with and would never buy, but I know it is very expensive. If you know how to make a Nexus One for $150 you should go into the business.

        If we were talking about iPhone 3GS, there you get 4-8 times the storage of a typical smartphone, 10 times better touchscreen, and about 1000 times more software. So if you can make iPhone 3GS for $150 you should go into the business also.

        Another thing you should note is that even if one of these carriers gives you a free phone, it would cost them $50 to do so. So what you’re really saying with a $150 price point is $100 for the phone (hardware and software). It’s really hard to make and sell any kind of electronic device for under $100.

        So basically, I think your $150 price point is a pipe dream. I don’t think you can buy a bag of Nexus One parts for that.

  24. I suspect Google never had any intentions of being a large scale phone retailer, but instead, wanted to show people what a top line Android phone looks like without being mangled or crippled by phone companies and cellphone manufacturers.

    • richard

      Hmmm… someone I can agree with. Arguably, building the Nexus One, Google actually bore the tooling and development costs for HTC to get into the highend Android equipment market. Thus “leading” the Incredible to market?

      More to the point, I believe the whole store thing was just more Google research and that it is actually for something else entirely. After all, even if someone like Google did decide to open an online store, why would they choose to sell cellphones of all things?!?!?! (Again, because it accomplished a different goal while letting them do their research in a “non-threatening” way.)

      I suspect their next “real” product will be (wait for it)the “gRouter”: a hybrid wireless home broadband router that replaces your current cable or DSL router but that also does direct wireless mesh networking (imagine the intersecting grout lines of your nearest tile floor). A special feature of this device will be its routing capabilities, which will enable it to dynamically route traffic through a mesh of nodes, including moving ones (in cars and other vehicles). This will allow for a dramatic increase in home broadband without actually laying Google fiber to the door. Instead they will be able to analyze the mesh and deploy multiple network backhaul points based on density and utilization.

      I wouldn’t want to be in the cellphone business then; or the home broadband business; or the tv business; or the home phone business

      • That gRouter will add White Spaces to the mix. And work in addition to your current adsl, cable or fiber connection. Google can make it for $19 and sell them by the millions to cover the world with free wireless broadband on White Spaces, available also for all Android phones.

  25. The problem with going the unlocked route is that right now, T-Mobile is the only provider that cuts you a break for bringing your own phone. As far as I know, the others charge you the same amount per month whether they are subsidizing your phone or not – and it doesn’t go down at the end of the contract period, either. Set against that, the value of bringing your own phone is limited – especially given that you lock yourself into GSM or CDMA, and in the case of the latter you’re at the mercy of the carrier as to whether they will connect your phone. And even if you HAVE GSM, you’re stuck because AT&T and T-Mobile use different frequencies for 3G – and no phone that I know of supports both.

    The reason the rest of the world beats us ragged on mobility is because they all standardized on GSM and on 900/1800 Mhz. We will continue to be a third-world country for mobile phone purposes (and that’s an insult to the third world) until we have a single standard that actually lets you move between multiple carriers. LTE could be that, but I’m not holding my breath.

    • Jon, you’re absolutely correct on the frequency challenge we have here in the U.S. An unlocked GSM phone typically doesn’t gain us much when it’s an either/or choice for data due to the different frequencies used by T-Mobile and AT&T.

    • That’s an epiphany I’ve had as well. Although I love my Nexus One and T-Mobile’s a great carrier, the freedom I get from an unlocked phone is a moot point when my only other choice is AT&T.

      T-Mobile might as well unlock all their phones and advertise that fact. No one’s going to switch to AT&T, a network barely capable of making a call.

      The 3G issue is also annoying.

  26. You’re saving $20 x 24 months = $480. The Nexus One cost $529.

    So you could look at it as paying only $49 for the phone.

    Too bad most consumers don’t realize the long-term savings. And too bad it’s not easy to find these sorts of deals on unlocked handsets vs. lower monthly bills.

    • Yup Alan, our instant gratification culture focuses more on the up-front cost, not the long term over the contract. Then again, to realize the long-term savings, you have to stick with a Nexus One for a while. That’s the other thing — we’re fickle too. When we want change, we want it when we want it. ;)

      • pveera

        What plan do you use?
        I never bought the Nexus one even though I wanted to because I thought I would end up paying the same amount I pay for the iPhone every month.

    • I use T-Mobile’s Even More Plus plan, which provides me unlimited voice minutes, data and messaging for $79 a month, without a contract. I was originally paying $59 a month for the same plan limited to 500 minutes, but I had two other handsets at that time. Since I dropped my Palm Pre and iPhone, I now use the Nexus One exclusively and increased the minutes to unlimited.

      • Kiran

        Ok cool. 59$ for 500 mins and unlimited messaging and data sounds awesome. Will need to verify if tmobile has good reception around Boston before switching. Mostly this should not be a problem.
        Thanks for the information K. !!

  27. Google’s inability to provide appropriate Customer Service and resolve significant Nexus One issues are the real culprits here: 3G connection, screen calibration, inability to view screen in sunlight, dropped calls, etc.. Can’t help but wonder if Google is preparing to offload all the Nexus One inventory to the carriers who will be stuck trying to service phones with fatal flaws. Don’t waste your money!

    • Jim

      I am with you on this. It is not just Nexus One, but across the board. Unless Google figures this out, it cannot be a real consumer power so to speak with all its new efforts.

      I am a big believer in their vision but not so sure that they have the capability of managing the details needed for being a consumer powerhouse. I think they still think too much from a machine perspective and this failed web store effort is a mere reflection of that.

      • richard

        ahem… and do you consider Apple’s customer service acceptable? I have experienced the “apple method” several times recently and it is POOR.

        Worse is ATT’s! These companies (and others) daily prove that poor customer service is not a deal breaker.

        I still think it is interesting that people interpret google’s store as a failure. Yet their shopping/checkout services are responsible for a vast number of transactions (and no doubt a good amount of customer service). I remain convinced that the store accomplished what google wanted; y’all just don’t know what that goal was yet.

        Have any of you actually investigated what types and volumes of direct customer service google currently provides? Or are y’all just making assumptions?

    • I agree with both of you on the customer service challenge. However, Google and HTC did address the 3G signal issue with a firmware update — I wish it had been sooner, but it wasn’t. I don’t have any screen calibration issues or dropped calls and the challenge to view the screen in direct sunlight is a direct function of the AMOLED display, which is being used on other non-Google phones. I wouldn’t call that a Nexus One issue that Google has left unresolved.

    • Lpinks


      You don’t ask customers to shell out $529 for a high-end device like that and then relegate customer service to online message boards. That is insulting.

      • I agree wholeheartedly.

        It’s tough enough to get people to spend that kind of money on something that they haven’t yet seen, but the sell becomes tremendously harder when they know that they won’t get the kind of support that they are used to when they buy other phones and electronics.

    • pb1994

      I agree…

      If you ignore the merits of the actual products, its interesting to contrast Google’s go to market with the Nexus One vs. Apple’s with the iPhone. They couldn’t be more opposite. In fact, Apple succeeded with the iPhone in all the areas where Google essentially failed with the Nexus One.

      For example: Google online only support vs. Apple walk up genius bar, Google online only sales vs. an army of Apple Store + ATT stores, Google launching on a niche carrier (tmob) vs. Apple with a large carrier (ATT), Google little to no marketing vs. sustained marketing blitz by Apple, Google unsubsidized pricing model (higher perceived barrier to entry) vs. $99 iPhone 3G and subsidized 3GS.

      Not to get all MBA on everyone, but it really seems that google screwed up 3 of the 4 Ps of basic marketing. Even though their product was compelling, their pricing, placement, and promotion made little sense…

      All of this really kind of shows the relative immaturity of Google as a consumer product company vs. Apple’s 30+ year veteran record such markets.

  28. I continue to assert the problem is not that people don’t want to buy unsubsidized phones. Instead, manufacturers will have to get to a point where they are okay with not getting obscene (in consumer devices, at least) margins on smartphones. With a bit more marketing and a $200-300 price point, the Google store could have been a success.

    • yep I agree, somewhere I read that IPhone, Nexus One, Droid et all take only around 150 dollars to manufacture and if you double to cover all your other costs(R&D, design etc), it will come to around 300 dollars.

      • As engineers, we were taught to quadruple the manufacturing cost to get the retail price. That takes it to $600. I’m not saying that’s right, but the middle-man economy demands it.

      • NuMystic

        That makes sense Kava with regards to products that have to be sold through Walmart, BestBuy, or mobile retail chains, but this article is about the Google Nexus One being sold DIRECT from Google to customers online, hence no “middle-man” retailer.

        Manufacturer > Google > Consumer

        instead of

        Manufacturer > Apple/Nokia/RIM/etc. > Retailer > Consumer

        Therefore Google could easily have sold the phone for far less.

        If they’d been willing to sacrifice some of their upfront profit to have a strong initial outing and grab significant market share, they could have actually been a contender.