Wednesday, March 17, 2010

Google Nexus One: Lessons to be Learned?

New sales data on the Google Nexus One smartphone has most observers concluding that Google has failed with its launch. Flurry notes that the Nexus One has shipped about 135,000 units in 74 days, where Apple shipped a million iPhone units in its first 74 days while the Verizon Droid sold a bit more than a million units in its first 74 days.

"Google Nexus One may go down as a grand, failed experiment or one that ultimately helped Google learn something that will prove important in years to come," Flurry notes.

But the sales curve might suggest something about the distribution channel more than anything else. Droid's sales suggest it is not the Android operating system which accounts for the low sales.

More likely the low sales are the result of a combination of changes in the typical distribution system. Most users buy their devices from carriers, most often preferring a discounted handset with an accompanying contract.

Google has been selling only unlocked devices, and only from a Web site, at full retail price. One could have predicted that would not be popular.

Also, Google initially started out with email support only. Given the history of consumer unhappiness with mobile service provider customer service, that also could have been predicted. When people have a problem, they want to talk to a live person, and they want to talk "now."

Also, though some policy advocates have been loudly calling for sales of unlocked devices as a consumer choice value, most consumers care less about unlocked devices and more about customer support. In an unlocked device scenario, it isn't clear whether it is Google, the handset vendor or the carrier that has the issue causing the problem.

Consumers may have issues with contracts, but they also prefer lower phone prices and the assurance that if there is a problem, the retailer will take responsibility.

What Google's experiment mostly shows is the value and power of an integrated distribution model, with clear responsibility and good customer service support. Unlocked devices do not generally resonate, and neither do full price handsets, especially when customer experience after sale is so poor.

Flurry post

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