I see three possible downsides to Google’s launch of the Nexus One phone.
First, they risk pissing off their cell phone partners who have been pushing “Droid.” They seem to have come to some sort of agreement with these partners – for now – but surely there is some behind-the-scenes anger from HTC, T-Mobile, etc.
Second, Nexus One is not search related, nor is it about “organizing the world’s information”, unless you consider your phone’s address book to be part of that mission. The farther Google moves away from their core competency, the more diluted they become as a business.
But thirdly, and perhaps most importantly – and I think this has been lost on most pundits covering this story – is the fact that this is the first time that Google is directly selling something to consumers. The ‘droid was “powered by Google” which meant that if it broke, you complained to T-Mobile. The Nexus One, however, is sold directly by Google. That’s a big difference.
It’s one thing to get questionable search results on Google.com, or to have an over-zealous Spam filter on Gmail, or to get bad directions from Google maps – these are all free and consumers understand that ‘you get what you pay for.’ But now that Google is actually making money directly from consumers, the game changes. If something goes wrong with Nexus One – say a major bug – consumers will direct their ire at Google. The invincible Google brand could be at stake here.
Of course, if Google succeeds with Nexus One, this could also be a stepping stone for many more direct-to-consumer paid products, like laptops or SaaS solutions (I’m thinking TurboTax and of course any Office product). Google does need to diversify away from search revenue after all.
Jason Brown
January 13, 2010 at 2:39 am
Not sure I agree with you here David. I know that some my most important information is located on my phone. I think Google sees making a phone as the next logical step in helping me organize all of my information. Yes, they are now in hardware, but really that is just a delivery device for Google itself — much like Chrome. And the advertising potential, with built in location capabilities and the ability of google to now integrate your phone info into its search marketing algorithms is huge.
David Rodnitzky
January 13, 2010 at 3:59 am
Good point Jason, but the search functionality is ancillary to the hardware, as is the advertising. Also, note the consumer complaints since the release of the phone (which proves my third point). From the NYT today: "And Google, more accustomed to providing minimal support for its free services, has been unprepared to deal with the higher service expectations of customers who are paying as much as $529 for its high-end smartphone."
Article Directory Script
January 23, 2010 at 5:48 am
IS Nexus get success in mobile market? If so, its all may be impact of Google name brand.
Anonymous
January 25, 2010 at 11:15 am
It's been a while since anyone at Google talked about their mission of organizing the world's information. If you talk to Eric Schmidt today, he'll tell you that Google is an 'Advertising' company.The main reason Google moved into the cell phone business was so that it could protect itself in the Mobile Ad space. The tech vision of the future is that mobile devices will become the primary devices for people and the laptop/desktop will become secondary devices for when a user needs to do more demanding work. Will this end up being a good move? Nobody knows for now. But what we do know is that Google will have to go through some growing pains as they get a better understanding of this market.
David Rodnitzky
January 25, 2010 at 3:25 pm
Interesting observations, Anon. Even if its true that Google now considers itself an advertising company (and I'll save that debate for a separate blog post), the fact that they are building hardware for the mobile space is still a significant departure from that mission. The acquisition of AdMob makes sense in terms of securing advertising marketshare in mobile, but you don't need to build your own phone to protect marketing dollars!
Tashia
January 28, 2010 at 6:13 am
Nexus is no doubt getting popular in open market not only because of Google name but also its feature for users.