Is Google Nexus One a bomb, or the bomb?

Silicon Alley Insider claims that Google's so-called "superphone" is a bomb, based on the first week of sales; Nexus One has no superpowers, whatsoever. I totally disagree. Nexus is the bomb. It's simply better than iPhone 3Gs or Nokia's flagship N900. Nexus One is smokin'. First week sales figures are to be expected, and Google showed real finesse by wisely taking a low-key approach to the device's launch.

Jay Yarow's headline seemingly says it all: "The Nexus One Bombs: Only 20,000 Sold In First Week." But there's more. He writes in the text that "these estimates are bad for Google. The company had plenty of hype gearing up for the launch of the phone. It put an ad on its homepage, and it sprayed its ads all over the web. Given all the hype, these sales numbers are pathetic."

Pathetic? The numbers are surprisingly good. Yarow cites sales figures released today by mobile applications tools developer Flurry, which also provides analytics data based on usage of more than 10,000 applications for Android and iPhone OS. Flurry's Peter Farago goes to great lengths explaining why Google only sold 20,000 Nexus Ones, although he does assert that Nexus One fell "short on sales expectations." By whose measurement?

Google is selling its phone direct, which is a new channel for the company. The current model only runs on one carrier, T-Mobile USA, which is the country's fourth-largest carrier. Most existing T-Mobile subscribers will buy the unlocked device, which sells for $529, unsubsidized and unlocked. New subscribers can buy a subsidized Nexus One for $179. Considering the high price, 20,000 units really isn't that surprising a number.

But there is more reasons to consider, which Flurry's Farago does:

  • "For its release, Google executed an online 'soft launch' of the Nexus One, a very different go-to-market strategy compared to Verizon's launch of Droid, on which it spent a record-breaking $100 million on marketing, including aggressive TV advertising spends."
  • "T-Mobile, Google's carrier partner for Nexus One, did not provide the same carrier co-marketing support as it did for the myTouch 3G launch."
  • "Cannibalization may also be playing a role as the Nexus One competes against the myTouch 3G for any new T-Mobile customer. In effect, sales are now split between the two handsets."
  • "Google, in an effort to avoid channel conflict with T-Mobile, appears to have set the direct-to-consumer price for the handset at over $500 dollars."
  • "Google chose to launch its Nexus One after the holiday season."
Flurry on Nexus One First Week Sales

MyTouch first week sales were three times Nexus One, according to Flurry. They came with T-Mobile distribution, price subsidies and massive marketing. One-third MyTouch first-week sales is good showing for Nexus One, considering limited distribution and marketing.

Farago attributes these factors to Google's lack of retail experience and failure to invest in real marketing. He writes:

Google did not take the steps to maximize first week sales. This is especially evident when one considers that among the most expensive costs associated with the launch -- marketing -- has not been incurred, and could have been applied to lowering the direct-to-consumer price point.

I don't agree. Google has demonstrated real finesse, by minimizing channel conflict and holding back more aggressive "hard" marketing until more carriers are in place. Additionally, Google allowed time to beta test its direct customer support services, which arguably had difficulties handling complaints about 3G connection problems on some handsets. Timing of the device's release is yet another indicator Google wasn't planning on huge sales numbers right away.

As for the device, early reviews are quite good, and even Farago asserts that "the Nexus One boasts the most advanced Android OS to date as well as unique features." I'll be posting my own review sometime during the next couple of days. While initially put off by Nexus One, I've come to truly love the so-called superphone, and I would encourage anyone considering iPhone to reconsider. That is for anyone who can afford Nexus One -- and I'll be bag lunching it for months now. The Google phone isn't a bomb, it's the bomb.

But that's just one opinion. I'm still collecting Nexus One user reviews. If you've got the device and like it or not, please fess up in comments or send me e-mail. Your experience will be valuable helping other gadget geeks decide whether or not to buy Nexus One. After all, they can't go to a T-Mobile store to try one out. Your opinion can help other Betanews readers to decide whether to spend, gulp, over 500 bucks or to choose a different device. I've made my decision to keep the Nexus One and to sell the Nokia N900. The N900's next stop will be Craigslist.

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