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Google’s Online-Only Phone Selling Model Has Failed

Google’s Online-Only Phone Selling Model Has Failed

Well, it’s been a while now since Google launched the Nexus One — and so far, it hasn’t lived up to their expectations. I guess it’s not as bad as the Google Buzz roll-out, but Google’s attempt at fundamentally changing the way we buy cell phones has yet to bear much fruit.

Goldman Sachs reduced sales estimates from 3.5 million units in 2010 to a mere 1 million, and only 2 million in 2011 if they launch a second phone, do a lot more marketing themselves, and decide to sell it in retail stores too.

We previously estimated that Google might sell 3.5 mn Nexus One units in 2010. Initial data-points were disappointing, possibly due to limited marketing and customer service challenges. Flurry estimated (based on mobile traffic) that Google sold 20,000 in the first week, and 80,000 in the first month, both annualizing to 1.0 mn. We forecast that Google sells 1.0 mn Nexus One units in FY2010, benefiting from US carriers other than T-Mobile, and non-US carriers such as Vodafone, promoting the device too, but suffering from limited marketing activity. 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 mn handsets per year in 2011 and future years. — Goldman Sachs

It’s possible Google can beat those estimates, but it’s going to be tough unless they do something drastic. Do you have a Nexus One? Would you say that purchasing your phone online was a less appealing alternative to buying in a cell phone store?



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