CES has come and gone, and I’m still ruminating (re: obsessing?) over the implications of Google’s Nexus One and its direct-to-consumer strategy. Go figure.
Maybe it’s because that despite all those gadgets introduced at CES, the Nexus One and Google’s delivery mechanism seem to present the most potential for disrupting the traditional way phones are bought and sold. I say this even though in some ways, I don’t think Google’s go-to-market strategy is that far a cry from what some others have done. Nokia has tried the direct-to-U.S.-consumer route. Various MVNOs have sold or tried to sell services branded as their own that use other entities’ networks. Outfits like Wirefly and Let’s Talk.com sell myriad phones that work on different operator networks.
Of course, Google is a search/advertising company and operating system provider that is getting into the retail space, so this is different. Google wants to sell all kinds of Android-based devices via its Web site (you’re out of luck if you want to touch and feel it before buying). I, for one, appreciate that the Internet giant wants to make the phone-buying process a much simpler one. I’m just not sure it’s ready for prime time, which, I guess, is why the company has referred to it an “experiment.”
After watching the video from last Friday’s conversation between All Things Digital’s Walt Mossberg and Google Vice President of Engineering Andy Rubin, I still don’t buy the notion that Google is not replacing the operator on some fundamental level or levels. Apparently, Google even told T-Mobile USA what kind of price plan to pair with the Nexus One. That sounds similar to the kind of control that Apple exerted when it first launched the iPhone with AT&T. It sure looks like operators are losing control. Is that a bad thing? Or is it just another way of operating in the new, more “open” environment? So long as the operator gets the revenue from the sales of data plans – and their networks can handle the traffic – they’re probably OK with it.
From what I glean, Google’s vision calls for allowing consumers to pick the device they want, then pick the carrier. That might work when all carriers are created equal, but pretty much everyone knows that it’s wise to check the coverage in the areas where you plan to use a phone before you commit to a carrier – or a device, for that matter. It didn’t work too great for me when I tried it, but consumers can use a feature on Google’s phone site to check T-Mobile’s coverage in their area.
In the end, doesn’t it just go back to network reliability and coverage? It doesn’t make a lot of sense to choose your device, then your carrier. It makes more sense to choose your carrier, then pick the device that best suits your needs and desires. Then again, that logic doesn’t apply to a lot of iPhone customers.
Interestingly, the Google phone site lists the upcoming models for Verizon Wireless and Europe’s Vodafone, but there’s no mention of Sprint. I did find a reference to the Nexus One not being compatible with CMDA networks such as Verizon and Sprint, and Google says “we are working hard to provide Nexus One phones optimized for the Verizon network.” No mention of Sprint there. Granted, Sprint does have Android phones, but surely Google isn’t going to limit the CDMA Nexus version to Verizon? That doesn’t sound very “open.” A lot of people find Sprint’s rate plans quite attractive.
You still have to wonder how the Nexus One affected Droid sales. When I first heard reports about Google’s “dogfooding” of the Nexus One phone back in December, I thought surely, Motorola and Verizon Wireless would be agitated about this development. But Motorola co-CEO Sanjay Jha joined Google when it announced the Nexus One last week, so he couldn’t have been too ticked off. Verizon Wireless is a little harder to figure considering all the marketing behind the Droid, but the Nexus-for-Verizon reference on the Google phone site has to help some.
Considering all the reports about customer support issues, it looks like Google has a lot more to learn when it comes to becoming a phone company. Or – sorry, I guess it isn’t a phone company, just a company that sells phones for other entities’ networks. Google has a lot of forgiving customers, so it might have time to smooth out the problems – like hiring some humans to answer the phone calls. If not, it can always chalk it up to an “experiment” that didn’t work.