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January 11, 2010 22:01 David Kerr
Afte the inevitable wave of irrational exuberance has come the equally inevitable correction and flow of negative comments regarding Google Nexus One.
  • We are now seeing a huge rebound of criticisms about customer service, implementation and execution, moaning and complaining for existing t-mobile customers who have to pay more than a new customer to get a cool device and strong complaints from developers about availability of SDK and support.
  •  Naturally, the questions about Google's ability to execute on direct sales are being raised but these shall pass very quickly in our view.
Within our wireless team we had divergent opinions from network centric, application focussed and device driven analysts but ultimatlely we arrived at the following key perspectives:
  • Consensus is that Nexus will be successful by high end tier Smartphone levels (single digit volumes in 2010 but upside potential when it rolls out beyond TMO in US and to more open markets in Europe). Nexus is likely to sell more through operator channels than direct overall. Handset volume though is not the metric by which Google will measure Nexus success nor should operators as Nexus sales are a means to an end.  If Google is successful and Nexus ends up driving usage and value for operators, they will support it with subsidies.  Otherwise, operators can passively watch Google evolve its own-branded offering with little to lose. Tier One handset vendors (SAM, LG) may have the most to lose as Google’s marketing muscle and brand coupled with compelling devices and experiences will be a strong competitor for Operator slots, subsidy dollars.
  • Handset revenues and profits are a nice to have for Google. Key to their success and long term ambition is too boost the mobile browsing ecosystem. More open devices capable of browsing/search/maps from Google or others is positive for Google.  Google needed to update and get close to parity in terms of an engaging, fun, easy browsing UI with competitive links to key apps like maps, media etc and this device achieves that goal. Google is great at creating a buzz and the media is ready to talk about something other than Apple.
  • Google Nexus and indeed the whole Android approach is not about controlling/owning the user (contrast this with Apple). Google’s key metric is advertising revenue. Google's vision is well publicized: the browser is how they will deliver services, even on mobile, and apps are a stop-gap measure as far as Google's strategic vision is concerned. Google is banking on HTML 5 as their solution to fragmentation but we believe they are drinking too much of their own coolaid here and underestimating the importance of apps. Google’s key goal is to increase eyeballs and advertising.
  • Some key elements that have not been addressed which we believe are key in Google’s future evolution and will be key to watch relate to Voice and what Google does its Gizmo5 acquisition to push Google Voice into a full VoIP proposition. This is where Telcos should be most worried and where we have yet to see all the pieces positioned on the battlefiled.

January 6, 2010 14:01 nmawston

The Google HTC Nexus One smartphone with Android 2.1 was unveiled in the US on Tuesday 5 January, 2010. It will initially ship in the US, UK, Germany, Hong Kong and Singapore. The HSUPA handset ticks most of the right technology boxes, including a 4-inch touchscreen, multi-tasking and a powerful 1GHz Qualcomm Snapdragon processor. The phone has a handy voice-recognition feature, which can be used for controlling text fields, and it will be a key differentiator. A user can quickly write SMS and email messages simply by speaking to the handset. Only time will tell just how accurate and reliable the voice-control solution actually is. Why has Google gotten into the handset business? Google wants to champion a flagship user-experience and limit fragmentation for Android, while simultaneously driving up its global user-base for future mobile advertising revenues.


Exhibit 1: Google Nexus One


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Some downsides: first, the Nexus One lacks a hard QWERTY and multi-touch, which may be an issue for some segments. Second, the handset's style and design are a little ho-hum and me-too. Third, the retail pricing, at US$179 postpaid and US$529 prepaid unlocked, is not as competitive as some might have expected from a company that is often associated with super-low-cost business models. And fourth, the Nexus One is initially being launched with T Mobile, which may lack the marketing clout of its bigger US rivals such as AT&T.

An interesting development is the opening of a Google-hosted online store, at www.google.com/phone, which will offer an online retail channel through which consumers in the US can buy a prepaid or postpaid Nexus One. A customer must register on the site (useful for Google to control the end-user), choose a phone model, pick a data-plan from T Mobile, then Google will deliver the phone directly to their home. In effect, Google has become a handset distributor and retailer. This is unchartered territory, and it remains to be seen whether Google can compete effectively with the likes of Apple and Amazon. The announcement is certainly good news for the online handset distribution industry. Online handset distribution, via firms such as Amazon, currently accounts for 1 in 12 of all shipments worldwide. With Google's huge marketing clout and its heavily visited PC search engine, online handset distribution is going to see a major uplift in activity this year. Google just made online distribution a hotter topic for 2010.