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The Nexus One Is A Failure: Here Is Why

January 14, 2010


Google's new flagship Android phone, the Nexus One, has now been on the market for a week and the numbers are in.  Analysts and consumers alike were excited to see how a Google branded phone would compete in a very competitive smart phone space.  Verizon, despite of a massive marketing effort, only managed to push a mere 250,000 Droids during its first week, falling well short of the 1.6 million mark set by the iPhone 3G(s).  Even Apple's original iPhone 2G moved 525,000 units in it's open week back in 2007.  Google is finding out the hard way that even they are not immune to dismal opening week sales.

According to Flurry, a mobile analytics company, Google didn't even come close to shipping the number of opening week units many predicted, with only 20,000 units of its "superphone" in circulation after its first week.  If you take into consideration all the units Google gave out to the press and their employees (19,665 of them), I'm wondering how many devices they actually sold.

Too early to call the Nexus One a failure? Actually not, let's examine the reasons why it is highly unlikely the Nexus One will be able to achieve the mainstream adoption many anticipated.  First, launch week is crucial in this industry. If your device doesn't reach a "critical mass" quickly, it has little chances of success. Devices such as the MyTouch and the Palm Pre suffered from subpar first week sales figures, and we're still waiting for those devices to recover.  Smartphone sales rely on word of mouth and press.  Many bought iPhones because they got to try a friend's, whereas you can't even try the Nexus One in a store.

If the opening week argument doesn't grab you, let's consider other factors to examine the Nexus One's chance of success.  Many are already arguing that right now it only runs on T-Mobile.  Is it going to change sales when it hits Verizon?  Unlikely.  The real problem is, who exactly is Google targeting with the Nexus One?  Those wanting a next generation "app based" mobile operating system and a sleek form factor picked up an iPhone.  Those who desired multitasking capabilities jumped on the Palm Pre.  Users yearning for a more open operating system purchased one of several Android phones over the past year and a half.   Those who didn't want to leave their carrier or demanded a network with superior coverage just signed two year contracts for a brand new Motorola Droid which, by the way, runs an almost identical operating system as the Nexus One.  Verizon will not save the Nexus One because the Droid was marketed extremely aggressively, boasting about a 5MP camera, full keyboard, Google Navigation with street view and the nation's best network.  These features and the iPhone Killer branding made it hard for Android supporters to pass up, especially since there was no knowledge at the time that Google was working on a phone.

So who is left for Google to sell the Nexus One to?  Our best guess is G1 users who are looking to upgrade, a small market indeed.  They are the only group of users who are interested in owning a smartphone that have not already found a recent alternative.  Other than the G1 users, Google would need to convince people to switch away from their current device.  The unfortunate truth is the Nexus One is not groundbreaking enough to have "switchers."  The device lacks multitouch and its internal memory is limited to 4GB (only 190mb is allocated for apps).  We've all seen similar form factors and the latest Android update does not offer a compelling argument for current Android 2.0 users to make the leap.

Talking about switchers, if you were to buy a Nexus One and wanted to cancel the contract after the trial period, it will cost you about $780, more than the device's unsubsidized value. This because you'd be paying both T-Mobile's and Google's Early Termination Fee.  Another reason potential switchers may be weary before investing in the Nexus One, since it is not a great user experience gain, and a truly groundbreaking device may be coming.

Some analysts predict iPhone users who are unhappy with AT&T may look at the Nexus One as their way out.  Probably the most critical point for any iPhone users is the apps.  We've already covered that the Nexus One only allows users to store 190MB of apps on the device; coupled with the Nexus One and Android low sales numbers, developers are less likely going to invest time in developing Android apps. Nobody argues today that Apple's App Store is far superior to those of it's competitors.   Developers who "invest" in buying an Android device believe that this is a temporary situation, but many developers will wait until the market is ripe before investing in an Android version of their iPhone apps.  And we're not even mentioning Google's shallow approval policies that get people to have their banking credentials stolen.

Lastly, let's look at the news coverage of the Google's announcement:

Ill timing, little marketing, and lack of revolutionary new features makes for a dismal sales forecast ahead.

Farewell Nexus One!

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