Nexus One Lessons

There are perhaps some lessons Google and everybody else can learn from the mixed results of the "direct to consumer" Nexus One effort.

Though it is hard to say for sure, the experiment might have influenced the current direction of the leading Android devices, ranging from the HTC Evo to the Droid Incredible and Droid X. If that was the intention of creating the Nexus One, the experiment bore fruit.

It might also be important to note that we had a test of two retailing concepts: the idea that U.S. consumers actually hate contracts so much they will pay full retail prices for advanced devices, and the notion that such devices can be sold direct from a website, bypassing the retail distribution chain the leading mobile companies use.

One might conclude that demand for unlocked phones is not as significant as one might have thought. The other observation is that the current retail model works pretty darn well, compared to "web only."

Also, after-sales support proved to be another weakness. Customers do not appear to have been happy with "email-only" customer support, and seem to have been scarcely happier with the added "by phone" support.

There's nothing wrong with experimentation, to test such notions. But we might remember that Apple was highly criticized for opening its retail store network. It now appears those critics were wrong. The retail store experience is helpful, maybe even necessary, as a distribution channel for advanced mobile devices.

iPhone, Evo, Droid Incredible, Nexus One: Which Has Best Total Cost of Ownership

The iPhone makes the most economic sense of leading smartphones if you opt for a minimum voice/data/text plan, says BillShrink.

The catch is, BillShrink’s research has found that that average data usage per person has risen a dramatic 3.5 times over the last 15 months. If higher usage means a user cannot buy the iPhone minimum data plan, then a Nexus One on a T-Mobile USA unlimited plan offers the lower total cost of ownership.

Too Early to Make Judgments About iPad, Nexus One

Some accounts of Apple iPad sales have suggested sales were disappointing for the first full day. Similar reports have accompanied the launch of the Motorola Droid and the Google Nexus One. The point is that observers are spending way too much time commenting on sales over a few days or even months.
Some trends take many months to years to emerge. According to comScore, 45.4 million people in the United States owned smartphones in an average month during the December to February period, up 21 percent from the three months ending November 2009.

RIM was the leading mobile smartphone platform in the U.S. market with 42.1 percent share of U.S. smartphone subscribers, rising 1.3 percentage points versus the prior period.

Apple ranked second with 25.4 percent share followed by Microsoft at 15.1 percent, Google at 9.0 percent (up 5.2 percentage points), and Palm at 5.4 percent.

Google’s Android platform continues to see rapid gains in market share as more Android-compatible devices are introduced to the market. So the point is not necessarily how well the Nexus One sells, but whether Android devices are taking more share in the market, which clearly is the case.

According to comScore, over the three month period between November 2009 and February 2010, Android gained five share points, while Apple was flat, Palm lost nearly two percent and Microsoft lost four share points. Research in Motion gained about 1.3 share points.

Similarly, it doesn't matter how many iPads Apple did or did not sell on the first day. What matters is whether Apple can uncover a new device niche between smartphones and notebooks or netbooks, or whether it can redefine at least a sizable portion of the netbook and notebook markets.

Nobody can make such judgements after a day, or even a week or a month.

Nexus One Outsells iPhone in February...Sort of

Sales of the Google Nexus One are now on the rise and beat the iPhone by 16 percent in February 2010, says RCS Limited, which expects the trend to continue. That data, based on U.K. results, contrasts with sales in the United States, where initial sales have been modest.

It isn't clear that the statistic means a whole heck of a lot, though. Sales practices are quite different in the U.S. market, compared to others where devices often are bought "unlocked" and at full retail prices. Since most U.S. iPhones are bought at subsidized prices, while many to most Nexus One devices are bought at full retail price, the sales comparisons are difficult. Any expensive device sold primarily "unlocked and at full retail" is going to have low sales volume in the U.S. mobile market.

Also, the Nexus One has been viewed by many as a "demonstration" project whose real objective is to show what can be done when Android open-source software and hardware are tightly integrated.

According to a report by Flurry, Google sold roughly 135,000 of its new Nexus One phones in its first 74 days on the market. By contrast, Apple sold 1 million of the original iPhones in the first 74 days, while Motorola sold 1.05 million Droid phones -- which are based on Google's Android software -- during the same timeframe.

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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

Nexus One for Verizon

The Google-specified Nexus One, released on T-Mobile USA's network in January, will launch on March 23, 2010 on Verizon Wireless, a source says.

Verizon will introduce the Nexus One on the day the International CTIA wireless show begins, Neowin reports.

Pricing and terms of use are not known but likely will be "competitive" with T-Mobile's positioning.

The Nexus One is available for T-Mobile on an unlocked basis for a price of $529. Consumers can also order the phone through T-Mobile for $179 with a two-year contract.

The "Problem" With Nexus One is the Retail Packaging, Not the Phone

By some accounts, the Google Nexus One phone has not sold as many units as some might have hoped. Flurry, a mobile analytics firm, estimates that 20,000 Nexus Ones were sold in the first week. That tracks poorly compared to the myTouch3G, which sold up to 60,000, and the Motorola Droid, which sold 250,000 in the first week.

Some people really like the idea of "unlocked" phones, despite the full retail price, as the price of gaining freedom to use "any" carrier (in the U.S. market two of four major carriers). But so far, most U.S. consumers seem to prefer the old "closed" model, where they get discounts on devices in exchange for contracts.

Beyond that, there is the clumsy customer support process. Users can email Google and get an answer within 48 hours. I don't know about you, but if any service provider took that long to get back to me when I have a problem, they will not be my service provider much longer than that. I can easily find a replacement provider within two days.

But that's the problem with Google's current model. With the current model, a customer contacts Google, and hopes the problem is not something the carrier (T-Mobile) or HTC (the device manufacturer) has to fix.

That's no slam on the device. But the customer interface is wrong. People are used to buying from one retailer that "owns" the customer service responsibility. And people will not be happy with two termination fees for early cancellation of a contract--one charged by T-Mobile USA and a separate restocking fee levied by Google.

Ignoring the amount of the fee and the logic, that's just going to make people mad. People generally understand the early termination fee. But they don't expect to pay twice.

Unlocked phones have sold better in Europe, but there is a huge difference between the U.S. market and Europe. In Europe, when one buys an unlocked device at full price, it really does work on all networks. In the United States, Verizon and Sprint use the CDMA air interface while AT&T and T-Mobile use the GSM air interface.

So an unlocked phone will only work on half of those networks. Under such conditions, the value of an unlocked phone is dramatically reduced. But most consumers don't really care about air interface or "locking."

They are used to a retail relationship where they know who owns the product and process. And there still is not much evidence to indicate the value of an unlocked, full retail device is more important than the comfort of knowing who is responsible when something doesn't work properly.

Despite the generally-accepted wisdom that "open" ecosystems innovate faster (which is true), that doesn't mean customer experience is better. As Apple has shown time and again, a closed, tightly-integrated approach can produce a much-better experience and lots of innovation at the same time.

So far, it doesn't appear the unlocked Nexus One model is doing that.

Google Nexus One for AT&T?

A device that's almost certainly an AT&T-compatible version of the Google Nexus One has been approved by the Federal Communications Commission. The version now sold by Google works on all T-Mobile USA 3G spectrum. but not on all AT&T 3G bands.

Versions running on Verizon's CDMA air interface and also for Vodafone are expected at some point.

Both the Nexus One and the newly-approved phone are being made by HTC. And while the name of the product in question isn't given, its model number is: 99110. The model number for the current version of Google's smartphone is 99100. These are so close its seems very likely they are from the same series.

Do People Expect Too Much from Nexus One?

The Nexus One launch has not gone flawlessly, that is clear enough. Users report their devices are randomly switching between the T-Mobile USA 3G and the EDGE network. Early Apple iPhone devices had the same problem, some niote.

Others are disappointed Google wasn't "more disruptive" of the retail pricing regime, or the lack of multi-touch support for the screen (an input capability using input from two fingers, used to enlarge a section of the screen image by pinching or sweeping the touch points apart or together.

Despite the "earned media buzz," Nexus One's first-week sales appear to fall far short of sales of the Apple iPhone, for example. Flurry estimates the iPhone sold more than a million units in three days when first introduced, and 1.6 million units in its first full week,  while the Nexus One might have sold only 20,000 units.

The Verizon Droid sold 250,000 units the first week it was available, while the HTC "myTouch" sold 60,000 units in its first week of availability.

To be sure, Nexus One, myTouch and Droid all are available on just a single network in a single coutnry. The iPhone initially was available in eight countries and eight carriers.

That's no coincidence. After the iPhone hype, it is proving more difficult for each competing device to illustrate how it is similarly "revolutionary." There's just no way to get around the fact that the iPhone was revolutionary, and so far, the other devices, though unique in many wasy, simply are following in the general mode.

Apple might have seized such a mindshare lead that there simply is no way any other device can "challenge" iPhone. That isn't to say many other touchscreen smartphones will fail to be built and marketed, but simply that the "buzz" hasn't been matched by the same sort of enthusiastic consumer resposne as the iPhone received, simply because no subsequent device, so far, as proven to be such an advance over the earlier generation of devices.

So far, all the other models are "like the iPhone." So far, that hasn't been enough. That's one reason why at least a few of us might think the challenge for all the other devices is to create a unique identity in the market, not to "be the next iPhone." That probably cannot be done at this point.

What device promoters can do is what Research in Motion achieved with th BlackBerry. RIM created an email-optimized device that syncs seamlessly with key Microsoft applications such as "Outlook," in additiion to handling email, capturing a specific segment of the mobile device market and end user base (business users).

But there's more to it than just that. The mobile is a mass market retail business, where marketing, distribution and customer support all matter. As much earned media attention as Nexus One has gotten, it is nothing like what Verizon was apparently able to do with a huge marketing and advertising blitz for its "Droid," or what Apple was able to do, not just with its own earned media campaign, but with a follow-on marketing campaign and network of highly-trafficked retail locations.

The Nexus One is being sold through a Web site, with only earned media support. Verizon launched a $100 million on marketing blitz, including the key Christmas selling season. Suffice it to say many many millions more people know the name "Droid" than "Nexus One."

T-Mobile, whose currernt role in the Nexus One ecosysem is largely indirect, does not appear to have supported the Nexus One launch with its own marketing funds, though it did for the myTouch.

Also, with a few new Android devices now competing for attention, there may be some fragmentation of the message. There's just one iPhone; there are several Android smartphones.

Also, Google might not have priced the device at levels that would drive more volume, though it also is battling the known resistance most end users have to paying $500 or more for an "unlocked" smartphone that only works on one U.S. network (with full access to all the frequency bands) anyway. What does "unlocked" mean to most consumers when the device can only be used on one network?

Beyond that, there is the simple fact that device hype likely outstrips ability to deliver, at this point. Everybody is looking for the first true "iPhone competitor." That might be asking too much.

http://blog.flurry.com/bid/29658/Flurry-Special-Report-Google-Nexus-One-Launch-Week-Sales

Is Nexus One A Particular Threat to Service Providers?

Does Google's Nexus One launch mean anything in particular for mobile service providers? That might be a matter of some debate at the moment. Some observers were expecting something "more disruptive." Perhaps an ad-supported voice service; maybe a completely unlocked device able to work on any carrier's network; maybe a business model that clearly delineates a new role for the handset provider.

That didn't happen. Some observers think the bigger innovation is the way Google is selling from a
Web site. Some might see too much difference there, either. Selling from a Web site isn't too unusual these days, and Apple's retail stores and existing carrier Web sites.already provide models for handset distribution aside from the branded mobile carrier stores.

To be sure, an "unlocked handset" strategy always will be tough in the U.S. market until such time as most carriers are using one single air interface and handsets are equipped with enough frequency agility to adapt to whatever network si providing access. An unlocked handset today means a choice of no more than one or two major carriers (one WiMAX, two CDMA and two GSM).

The other angle is that U.S. consumers have not yet shown any desire to pay full retail price for a handset, when they can get a subsidized device at the price of a two-year contract. People might gripe about the existence of contracts, but they have choices. They can pay full retail for their devices and avoid the contracts. Not many make that choice.

The more interesting observation is about what various Android devices really are. A BlackBerry is an email device; an iPhone is a Web surfing device. Many feature phones are texting devices. Some models are social networking devices, or at least highly optimized for that purpose. Some devices are optimized for navigation.

Could a new niche be developing for a "search" device? Is "finding stuff" a sufficiently robust need that at least one of the Android devices becomes recognized as the single best device for finding things? That seems to me the most interesting question about what the Nexus One or broader family of Android devices might raise.

Matters always can change, but at least for the moment, it does not appear the Nexus One is especially disruptive of the existing mobile business model or standard practices, either.

http://connectedplanetonline.com/mobile-apps/news/googles-nexus-effects-0115/?imw=Y

Loosely-Coupled Nexus One Mobile Ecosystem Creates Problems

Some problems are predictable; some aren't. It was predictable that as owners of unlocked Nexus One devices began to experience problems, they'd have to run the gauntlet of fingerpointing one often sees when ecosystems are loosely coupled.

Reporting connectivity issues, some users have been told by T-Mobile USA that it is "an HTC problem," while some users communicating with HTC have been told "it's a T-Mobile problem."

Other problems are echoes of what has been seen in the recent and immediate past, namely complaints about the quality of the 3G networks. Some users complain that 3G coverage is weak or non-existent. Some report that their devices are switching from 3G to 2G networks. Again, it might be a handset issue, but switching from a 3G to a 2G network is what happens when a 3G network gets congested.

In other cases, the error modes suggest there is a software or hardware problem. At least some users say an active HTC device, when sitting right next to a Nexus One, gets great signal while the Nexus One gets a weak signal. It's hard to blame that particular circumstance on network issues.

All that is known right now is that there is some problem using the Nexus One on the T-Mobile network.

The loosely-coupled ecosystem (open devices sold independently of service) is bound to create customer service issues, irrespective of the merits of either a network or handset.

Google Nexus One: the Difference Between "Device" and "Service"

There's a downside to "open" approaches to retail distribution and support of mobile devices. Highly-technical users might not mind, in fact, might enjoy, having to play with their devices and software.

Most end users just want things to work. For all its potential problems, tighly-integrated retail approaches, where software, hardware and retail support are integrated, has advantages. That approach tends to reduce the potential for user unhappiness, particularly when after-sale issues start to arise.

That is one downside for the Google Nexus One approach, which has Google selling unlocked devices, without direct retail relationships with service providers. When problems start to manifest themselves, users are likely to become frustrated with Google's ability to provide email and forum support.

As the old saying goes, one of the things about being a service provider is that one "occasionally has to provide some service." Granted, Google actually is acting as a device retailer for Nexus One. But users are not likely to care. They got their phones from Google and they will expect Google to solve after-sale problems.

If T-Mobile did not sell users their phones, they logically are going to refer users back to Google for device-related questions. It is bound to cause headaches, and also is likely to cause some buyers to gravitate towards a Droid, as Verizon will take ownership for all problems that could arise.

"Open" leads to more innovation, no doubt. But the mobile business is only partly about innovation. It is a service business. And that is likely to prove important, going forward.

Google Nexus One: Buy the Rumor, Sell the News

"Buy the rumor, sell the news," traders sometimes say. That seems to apply to Google's announcement of the HTC-built "Nexus One" smartphone.

There was so much leaking of news about the device, its distribution model and retail pricing that some of us likely were underwhelmed by the actual launch.

That is no slam on the device, just a comment about expectations.

As sometimes happens with financial assets, sometimes the big run-up occurs only at the "rumor" stage, with the actual confirmed event then provoking a bit of a sell-off. Some of us might note that it has taken a year for Android devices as a whole to reach what appears to be an inflection point in terms of mass buyer interest.

One probably has to credit Verizon Wireless for almost single-handedly creating "buzz" around its Droid, with spillover effects on the rest of the Android market, in all likelihood. But as many have noted, though the Nexus One appears to be a fine device, the business "wrap around" is largely conventional.

In fact, in some ways, Google is being "carrier friendly" in a way Apple has not been. That likely comes as quite a shock to many who thought Google was angling for a bit more disruption. The phone can be bought at full retail and unlocked. That's fine, but few Americans buy their devices that way.

An unlocked device can in principle be used on any GSM network in the United States, but the frequency range specified for the Nexus One means that, if used on the AT&T network, 3G won't work. In practice, that means the Nexus One is a "T-Mobile USA only" device.

If bought with a two-year contract from T-Mobile, the device costs $179. Some people will note that the Nexus One is "first" device that actually can go "head to head" with the iPhone. Others might almost say, "so what?" If all any other competing device can do is replicate the iPhone, many users might simply buy the iPhone.

Progress in the Android handset space continues to be quite rapid, so we'll have to wait and see what happens next. But it would not be surprising if it takes a little time for the Nexus One to have an impact. If the massive Verizon advertising campaign for the Droid means anything, it means promotion and marketing can make all the difference, even for a highly-capable device such as the Nexus One.

As the launch hype fades, we likely will settle in for a year or more of what appears only to be incremental growth for the Nexus One. So far, some of us cannot yet see why the Nexus One is such an advance over the Droid, as some expected. Then again, that's what this next year or so is about: allowing consumers to become familiar with the device and figure out where it fits in the smartphone market.

One might simply argue that the Nexus One is not the iPhone, and neither is the Verizon Droid, meant in a market positioning sense. The Apple iPhone seems to have created a large and sustainable niche of its own. Other devices might emulate the iPhone, but cannot create their own sustainable niches unless they somehow create differentiated audiences, as we might say in the media business.

In other words, Nexus One has to create a fan base that uses and perceives the device to be different from an iPhone, not the same. So will the Droid and all other devices in the high-end smartphone segment of the market. There's only one "iPhone." All other high-end devices must essentially create their own sustainable niches.

Matters are different at the lower end of the device market, where price and functionality make more devices functional substitutes for each other. I don't think that is the case at the high end. We'll see.

Google Nexus One Unveiling Jan. 5, 2010?

Google seems to be gearing up for a Jan. 5, 2010 unveiling of its Nexus One smartphone. The somewhat controversial move might be seen as a misguided effort that will undercut Google's effort to support broad adoption of its Android operating system by all the major service providers.

Worse still, in the worst-case scenario, Google is aiming to become a service provider in its own right. That seems highly unlikely. That really would strain relationships with its carrier partners. Nor does Google seem to be angling to become a hardware supplier in the same way that Apple is.

True, it seems to be fostering development of handsets. But even a Google-branded device might be seen as a way of pointing out what it thinks could be done.

One suspects that the unveiling is more of a demonstration project, intended to showcase what might be done with the Android operating system when paired with mobile hardware. One reason for that belief is that unlocked smartphone devices are expensive enough that few actually are sold in the U.S. market.

More seriously, T-Mobile is rumored to be readying a contract-subsidized Nexus One deal, which would put the out-of-pocket cost of the device within typical ranges for some other leading smartphone models. The typical model is a two-year contract in exchange for a device subsidy, and that is what most observers expect to see.

That is a fairly well established business model, giving T-Mobile a period of device exclusivity before it also is made available to other service providers.

The other angle is that if Google were really serious about becoming a player in either the device or service provider business, it likely would have readied deals in multiple countries.

The key thing is whether the user experience winds up being something users clearly can perceive as offering a "delightful" experience. That would seem to be the point. Whether Google can deliver remains to be seen.

How Significant Will Google "Nexus One" Be?

It's increasingly clear that a new Google-branded "Nexus One" unlocked smartphone will be sold in 2010. What remains unclear is how much impact the device will have, for a number of prosaic reasons. Unless Google has designed a dual-mode, multi-band device capable of operating on both GSM and CDMA air interfaces, roughly half the market will be inaccessible. Even if the device is GSM certified, it has to be built using a radio operating across all U.S. GSM bands, and that isn't entirely clear, yet.

It might be the case that the Nexus One simply has not yet been certified for AT&T's 3G spectrum bands, or for Sprint and Verizon networks using CDMA. For an unlocked device to work across all four of the major U.S. networks, that would be required.

So far, it appears the device is certified only on some of the U.S. GSM bands. What that means is that T-Mobile USA absolutely will be able to support the Nexus One. It might work on AT&T's spectrum as well, but it isn't completely clear that is the case, at the moment. So far, AT&T has declined to offer an Android-based device in its device line up.

That issue should be clarified soon enough. The other issue is the retail price of the phone. Unlocked phones can be bought now in the U.S. market, but few consumers do so, because of the price. Perhaps Google plans to subsidize the device, but if not, Nexus One will not be a mass market device at the start. Few consumers buy devices at $600 when a subsidized device costs $200 to $300.

Perhaps Google plans to offer an installment plan, which will help. If the Nexus One really provides a better user experience, it will be helpful. But if it is sold at full retail price, and works on just one U.S. GSM network, its impact will be limited, to begin with.