Nexus One a Failed Experiment In Online Sales

shmG writes "The demise of the Google Nexus One phone is fairly straightforward: a lack of sales killed the product. While it will continue to sell through Vodafone in Europe, KT in Korea and a few others, the experiment of Google indicates that selling a phone direct to consumers online is dead. 'The bottom line is people like to look at phones in the store. Google has a lot to learn about phone sales, this is one lesson they learned.'"

Comments

False

[mark72005]

The reason why the Nexus One failed is because it was so damned expensive out of pocket.

Re:False

[ani23]

Amen Most iPhone sales are online. Its not that they want to look at the phone in the store. They want it subsidized. wonder why they dont go subsidized via tmo and att.

Re:False

[Anonymous Coward]

Exactly. Plus, people shopping for an upgrade phone wouldn't see it on their phone company's website.

Failures:
1. Large upfront cost. Consumers don't think about future costs.
2. Not shoved in your face. Consumers aren't smart enough to seek things out.
3. Too many hoops. People had to do too much work if they wanted to get carrier subsidizing worked out.

Re:False

[mark72005]

No, iPhone consumers don't want to look at the phone in store. Mostly they don't even care what it does, they just want an iPhone.

Re:False

[mungtor]

The reason it seemed expensive is because you weren't paying off a loan with the remainder of your wireless contract. Considering that all smartphones are really just small computers, their prices are pretty much where they should be.

The reasons behind the demise were probably a) some people can't do the math to figure out how much they're really paying for the phone, and b) others really like upgrading every 2 years to impress their friends.

Re:False

[MrEricSir]

But wireless contracts tend to be the same price whether you're paying off a loan or not; in other words, you're just wasting a lot of money if you didn't get a phone+contract from your carrier.

Re:False

[kenj0418]

they just want an iPhone.

Well, it does have the wifis and the bigger Gee Bees.

Re:False

[h4rr4r]

Not with T-Mobile. Go look at their site.

Re:False

[h4rr4r]

T-Mobile does give a discount for bringing your own phone. It is why once the contract on my droid I will be going that way. That and they have phones with unlocked bootloaders.

Re:False

[Lord Byron II]

The real problem was that nobody knew that it was available. It got plenty of attention on /. and other tech sites, but take an average Joe who owns a smart phone and I guarantee you that he's never heard of it.

Re:False

[arkane1234]

I'm slumming on T-Mobile, and if this is slumming then call me homeless.
Hella better than Verizon with customer service, features, and choices.
The price is the reason I switched, and the rest sold me.

Re:False

[JDS13]

I bought my Nexus One outright for $529 plus tax, and pay T-Mobile $60/month (plus $4 tax) for unlimited data, unlimited texts, unlimited night and weekend talk, and 500 prime time talk minutes/month. If I'd taken the subsidy and bought the phone for $179, then I'd have to pay $80/month for the same deal. Similar plans are at least $100/month on Verizon or ATT, and $80 on Sprint.

By foregoing the subsidy, I paid an extra $350 for the phone. But over 24 months, I save $20/month or $480, so (at 0% interest) I come out ahead by $130. Also, the phone is unlocked so I can pop in an ATT or European or Asian SIM card, and talk economically on the phone anywhere. And if I was unhappy, I could sell it on eBay.

But I'm not unhappy - it's a terrific phone at a great price.

Competition

[orcateers]

Anyone else think that the Nexus One was a project designed to push Android adoption, and that Google's support for the hardware fell off because the rest of the Android hardware market bulked up sooner than they expected? it's an idea i've considered.

Re:Competition

[fishthegeek]

IMHO it was because the hardware that was available from the carriers was really anemic. I had a G1 and it was really slow, had little memory and frankly was ugly. The MyTouch wasn't much better. I bought the Nexus 1 about 3 weeks after release and I love the phone. I suspect that Google wasn't trying to push Android adoption as much as it was trying to push OEMS to elevate the quality of the hardware. Since the N1's release we have the Evo, Droid X, and the Vibrant to hold up as high quality phones.

Lack of promotion?

[MrEricSir]

I never saw the Nexus One promoted, nor a link to the store anywhere (except perhaps on Slashdot.) Google has used their pageviews to promote other products and services, for example their ads for Chrome.

Could it be the reason Nexus One didn't succeed was simply a lack of promotion?

Online isn't the problem, it's carrier subsidies

[Andy Dodd]

95%+ of the population doesn't have a problem with being locked into a contract for two years in order to save a few hundred on a phone, especially since no provider gives any significant plan discounts to those who "bring their own device" in the USA.

So a non-subsidized phone is dead in the water from the beginning unless it offers something that's so unique as to be worth the price. (For me, if the N1 had a physical keyboard, I would have paid the money for it. Once they released the version that supported AT&T 3G, it was the only device that had a recent Android release on AT&T. However, it had no keyboard.)

Was it really a failure?

[jpmorgan]

I guess that depends on what Google hoped to accomplish. From a pure sales perspective, the Nexus One didn't make a big dent in the market. But with Android, Google is trying something that Microsoft tried with WinMo, and failed at; one of the many reasons was stagnant, crappy and divergent hardware. I've never believed the purpose of the N1 was to sell a lot of phones... that was obvious from the selection of T-Mobile as the carrier... the purpose was to drive Android forward and keep it from falling into one of the traps WinMo fell into.

So if you compare pre--N1 Android phones to phones in the post-N1 era, the difference is startling. Nexus One may have failed in sales, but it succeeded in pushing the ecosystem forward. And I suspect that's all Google ever really wanted.

USA subsidising model

[DrYak]

To be more precise, it seem to be that the problem stems from how the subsidizing is done in the USA :
- Carrier get exclusitive arrangement on certain model.
- Said model is only available at their (physical or online) store
- The only way to get a subsidised phone is through these stores.

This pretty much fucks up the market, because you don't get a free choice of service provider and phone. You pick one and you'll be restricted for the other.
And a phone without an exclusivity contract has just no choice.

Contrast the situation in several European country (including Switzerland, for a precise example) :
- Service providers don't give a damn about exclusive phone models. They compete purely on services and data plans.
- Phones are available in various shops depending on what the store's suppliers has, not who has signed an exclusive contact with whom.
- Thus most major phone companies (Nokia, Motorola, SonyEricsson, Samsung) are available in most shops (mostly in brick and mortar shops)
- Some shops could even import less known brands (Palm, Google, the first Android based HTCs, etc.) (mostly imported in computer-parts shop and other shops for technically savvy people).
- Subsidising is done at the shop level : You subscribe to or extend a contract with the service provider of your choosing available in said shop, and the provider will give a rebate that you can redeem on any phone of your choosing (as long as the phone is also in this shop's catalog)..
- Phone and service aren't linked. Service providers don't give a damn on which phone you used their rebate, as long as you sign a contact with them.
- You can actually use the Phone with a different SIM or even offer it as a present to your significant other, etc. (no SIM lock).
- As long as you keep the contact for said duration the provider is happy, they'll only get annoyed if you cancel the contract prematurely (you'll have to reimburse a part of the phone depending on how early you cancel).

Results :
- Phones from big companies have all their chance.
- Phones from less known companies can still get sold in some quantities through smaller shop specialising into import from those compagnies.
- Service provider have to concentrate on providing good services, because that's the only criterium they compete on.
- No phone company can hope to get away with shitty service just because the sell some magic Jesus-phone. If the service sucks, the users will simply get the phone with another service provider.

They DIDN'T EVEN TRY!

[YA_Python_dev]

Sorry for the uppercase, but this is infuriating: the Google online store was actively refusing to sell the damn phone to more than 95% of the world population!

There are tutorials all over the internet in all kind of languages with complicated and costly (more than US$ 100 on top of the official price) procedures to buy the Nexus One outside the US.

The thing has been available in Europe only after six months and has been frequently sold out for weeks in both stores and online stores. See e.g. the difficulties to buy it in the UK, France, Italy, eastern Europe, etc. from May to the beginning of July.

I've been trying to buy it (from Italy) for months and I've finally found one only three weeks ago thanks to a post on a forum that tipped the right store that had one available.

So before jumping to wrong conclusion, please try to avoid blocking more than 95% of the world population from your store (no jokes about starving African kids, please: Africa is less than 15% of the world population, and not everyone there is busy dying anyway). And keep in mind that people from Europe and some Asian countries get much better than the average American what these thing can do (the first thing I did with mine is installing bash and Python; and, yes, a powerful always-on pocket computer with GPS, constant internet access, camera and all kind of sensors can be programmed to do lots of new unusual useful things).

n900 and carrier discount

[Bruce Perens]

I paid $500 for a Nokia n900 and get about $20 off my monthly t-mobile payment vs. what I would have paid with a subsidized phone. It evens out in the length of the two-year contract for a subsidized phone. And meanwhile I can plug in foreign SIMs when I go overseas, so I don't have to carry a separate unlocked phone. And could I really have resisted a phone that can run a full Debian distribution in a chroot while it also runs its own, mostly Open Source, non-Java, platform?

But I'm not the normal consumer, am I?