Nexus One Sales Are Lackluster: Here’s Why

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Ten weeks after the launch of Google’s Nexus One smartphone, sales continue to remain slow. Mobile analytics firm Flurry, who also projected first week and first month sales for the snazzy device, has just released its latest sales estimates, deducing that in 74 days, 135,000 devices have been sold.

This is in sharp contrast to the Motorola DROID and the original Apple iPhone, which both sold a million units in the same period of time.

Flurry actually used 74 days as a barometer, because that was how long it took for the original iPhone to sell one million units back in 2007. Motorola’s DROID sold 1.05 million units by day 74, and that’s to say nothing of future iPhone releases, which all crossed the one-million-sold mark even more quickly.

Flurry lays out some good arguments for why Nexus One sales have lagged behind DROID sales (and we really do think that DROID is the more accurate barometer, rather than using the 2007 iPhone benchmarks), but we think it’s really all about one thing: Carrier.

Problem 1: T-Mobile

Although the Nexus One is available unlocked (for a higher price), it is still largely tied to a single carrier in the United States (and in Canada). That carrier, T-Mobile, has the smallest 3G coverage area of the major wireless telecos. That’s a big problem when you are talking about a phone that really needs to be connected to 3G or Wi-Fi to show off its best features.

Conversely, Verizon has a huge subscription base, the most consistent 3G network and is running a very aggressive ad campaign promoting the DROID.

AT&T may be the bane of many iPhone users’ existence (although it is slowly improving), but the coverage options still trump T-Mobile, even with 3G out of the equation. Fortunately, Google has just made unlocked Nexus One phones available for AT&T and Rogers 3G networks. Unfortunately, this is still a separate version from the T-Mobile Nexus One, which means that if you wanted to switch carriers in the United States or Canada and keep 3G, you’re still SOL.

Once the Nexus One hits Verizon, we expect sales to really start to increase.

Problem 2: Buying/Getting Support

When Google officially released the Nexus One, I commented that it wasn’t really about the phone, it was about Google’s new phone marketplace.

Seventy-four days later, this phone marketplace has a lot of problems that still haven’t been completely resolved. First, customers complained about an additional (and excessive) early termination fee that Google charged for users who terminated their contract in the first 120 days of ownership. This fee was in addition to T-Mobile’s fee and as expected, consumers went ballistic. Google has since lowered the ETF to $150, but that still means you’re paying two early termination fees if you cancel in the first four months of use.

Then, there’s the ongoing issue of getting support for the Nexus One. Google has since improved support options, but you still need to potentially deal with three different people: the manufacturer, the wireless company and then Google. That’s problematic and it is something that doesn’t happen for other phones, even on the same carrier. When I had problems with my BlackBerry, I called and was served by a T-Mobile person — sometimes I had to jump through hoops to talk to a RIM specialist, but I didn’t have to call RIM directly.

Plus, I do think that perhaps Google underestimated how many people like to, I don’t know, physically touch a phone before buying it. Now, I’m not one of those people (Hey, I pre-ordered the iPad sight-unseen), but many users are — and not having any store presence is problematic, if only because it decreases visibility.

Bottom Line

The Nexus One is clearly not the big hit that many expected it to be — and even on Verizon, it might never be a hit.

However, the fact that DROID numbers are so strong shows that this isn’t a platform problem, it’s an execution problem. It will be interesting to see Google’s next attempt.

What do you think of Nexus One sales? Are you surprised that they are as low as they are? Let us know!

Tags: droid, flurry, nexus one, phone sales



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