On the heels of Goldman Sachs cutting its sales forecast for the Nexus One -- which at the time of this writing is easily one of the top five phones HTC-manufactured phones available -- we're already seeing headlines (at ZDNet) that "Google's online-only phone selling model has failed."

Says who?

Let's back up. According to Electronista, Goldman predicted about 3.5 million Nexus Ones to be sold by the end of 2010. Now, a little more than two months into the year, Goldman says "just" 1 million phones will be sold. That's not a lot of phones in the scheme of things as Verizon reportedly sold more than a half-million Motorola Droids in its first month. (And it follows a rather suspect prediction of just 20,000 Nexus Ones sold in the first month.)

But the Nexus One didn't see your normal smartphone launch. It's not sold in stores. Its only advertising has been online -- that's not negligible, but neither is it anywhere near as visible as the marketing push we've seen behind the Droid, which continues on television, online and in magazines today.

Here's a news flash for you, courtesy of our friends at Goldman Sachs:

"We assume that Google rolls out a second Nexus handset, markets it more aggressively, and makes it available offline, and therefore forecast that Google sells 2 million handsets per year in 2011 and future years."

Wait, you mean to tell me a company will sell more of something if it puts it in an actual physical store and throws more marketing dollars at it? Great ghost of John Maynard Keynes, methinks they're onto something.

Seriously, the only company that can decide whether the Nexus One launch -- we'll even go so far as to call it an experiment -- is Google, and HTC, we suppose. They know how many were ordered. If as many or more have been sold than first thought, it's a success. If less were sold than originally anticipated, it's been a failure.

Regardless, we got a pretty darn good phone out of it, customer service mistakes, misguided analysts or not.

 

Reader comments

Who says Google failed with the Nexus One retail strategy?

8 Comments

Nice take on it Phil. I still maintain that the Nexus One was just a "testing-the-waters" move on Google's part. If you and I can realize that they would have sold a gajillion handsets had they offered them up to VZW and AT$T subsidized for 159 with no special restrictions, you bet your sweet patootie that Google knows it.

Everything else Google touches eventually turns to gold. Their foray into the handset manufacturing/distributing/marketing world will too, and they will decide their own pace.

IMO the real question is - will this be a good thing for us as consumers in the long run, and why do so many people care how good it is for Google? Google will find a way to take our pennies, let's just hope what we get in return is worth it.

Google needs a store. One they can put in malls like apples, where hundreds of people pass every day. Have plenty of commercials. Call it "google market" and sell all google and android products. Nobody goes into at&t for an iphone. Hands down the nexus one is a better device than the iphone 3gs, but apple did a much better job marketing it.

I agree that web-only may not have been the best way to market the Nexus One as many people still prefer to go into a store and pick it up there and then after having a play with a demo model, but web sales of phones is the future way to market them simply because us old timers are gonna die off and the younger generations think nothing of buying electronic products on-line.

I have bought high end 3d mice through Amazon UK, and people I know personally who are younger than me have bought their Creative and iPod MP3 players that way as well.

It may take ten years for most people to get used to the idea of buying their high-end devices on-line rather than in a physical store, but this just gives Google a ten year head start on the competition.

And if it doesn't quite work out for them yet it still is no problem - they already have several service carriers signed up who would be more than happy to sell the Nexus One through their Stores - T-Mobile, Orange, Verizon / Vodafone / Vodacon (whatever you call them in your country) and others. They have their Plan B sorted out already.

Phil Brennan.

I think they know EXACTLY what they're doing. It fits the model of how they roll out other things. They don't provide phone service, so doing bricks and mortar for one offering is a profit killer, plain and simple. Along those lines, it would be interesting to know what their profit is, and their support costs are, compared to other smartphones. My guess is they're laughing all the way to the bank profit-wise. Once they get the support model tuned, they'll be ready to push the next offering a bit more.
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IMHO, Google's retail strategy has issues. I purchased the N1 the day it came out, but decided to return it and wait for the VZW version once released (better reception, etc.). Trying to get a refund took over a month, not to mention not being able to get a return label from HTC for close to three weeks. The service was horrible all around.

Add in the upfront cost of the device, it's a concern for most consumers (although I believe TMO is enough reason why they only pushed out the numbers they've done so far). Toss in that you cannot touch, feel, experience the phone in person prior to purchase, it makes one hesitate the "gamble" of buying the unknown, at a steep price.

Now, factor in the consumer who waited on the sidelines (the non-beta tester consumer) and heard the issues with 3G reception, screen not completely aligned correctly, etc., and that has them waiting until the issues are corrected, especially since they cannot see in person for themselves if these are issues they feel comfortable with, or not.

A appreciate their approach, and love the device (once corrected and on a better network), but I believe the "online" retail solution they currently have is a difficult one to be successful with based on the cost of the product. Phones have become a "personal" item, and hitting the mainstream consumer by the masses via the "online" strategy will be a difficult task. There's only so many of us that are willing to take the plunge...myself included. :)

I agree with you on the refund issue.

I bought two phones on the day it was released, and decided to return one of them. HTC emailed me the return label the same day, dropped it off at FedEx that night, and it took almost four weeks to get my refund. That was only after I started emailing and calling (HTC) both Google and HTC every day a few times a day, after I did not get the refund at the end of the third week.

A diamond starts off as a piece of coal. Google knows what they are doing and everyone will look back on what they have done and talk about how the N1 or N2 or N3 or whatever phone they are on is the most successful and not remember the bumps in the road that was the T-Mobile and Nexus One initial launch. I hope the rumors are right and I will be able to buy my VZW version of the Nexus One in 14 days...

Success or failure, I am really liking my N1. As far as I am concerned. it's the only decent phone on T-Mobile right now.

It's been a huge improvement over my unlocked 1st gen iPhone. T-Mobile's 3G speeds in DC are excellent, and having GPS & multi tasking is awesome.