Nexus One Stumbles Out of the Gate

Here's an interesting wager: What do you think Google (Nasdaq: GOOG  ) will bail on first, China or Nexus One?

Google's first directly marketed smartphone is off to a rough start. It received generally favorable initial reviews, but the crowd's opinion is shifting. Nexus One is being picked apart for lacking tech support by phone, and for the possibility of incurring up to $550 in early termination fees -- more than the cost of the unlocked model.

The damage is done, and it's apparently even keeping pioneer buyers away. Mobile analytics specialist Flurry is estimating that Nexus One sold a measly 20,000 handsets in its first week on the market.

Putting this into its appropriately grim perspective, Flurry breaks down its estimates for the first-week of sales of other recent smartphone rollouts.

Product

Sales

Apple's (Nasdaq: AAPL  ) iPhone 3GS

1,600,000

Motorola's (NYSE: MOT  ) Droid

250,000

myTouch 3G

60,000

Google's Nexus One

20,000

Source: Flurry (based on tracked new users in the Flurry system).

To be fair, there hasn't been a full-on marketing blitz for the Nexus One. It's been mostly limited to media hype and a little landing-page loving on Google.com. There's no overpowering "Droid Does" campaign or the stylish onslaught that accompanies Apple product launches.

Some may blame the low visibility of Deutsche Telekom's (NYSE: DT  ) T-Mobile as the initial Nexus One carrier, but it had no problem moving three times as many handsets of the similarly Android-powered myTouch 3G, according to Flurry.

Roaming charges weren't billed in a day, though. Let's give Nexus One more than a few weeks before writing it off. I still don't see a blockbuster here, of course. Fellow Fool Tim Beyers disagrees with me, but I see the smartphone market as saturated, where Apple and Research In Motion (Nasdaq: RIMM  ) have already picked off the juiciest chunk of the population that can afford a smartphone's prohibitive data plan.

The irony is that Google may be in a win-win situation. Even if Nexus One proves to be a dud, the reasonably better success of Android-based Droid and myTouch 3G will keep Big G a major player in mobile.

You've got to love Google. Even when it seems to be losing, it finds a way to win.

Is the smartphone market truly saturated? Agree or disagree with Rick in the comment box below.

Google is a Motley Fool Rule Breakers recommendation. Apple is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz is starting to see more Apple products creep into his home lately, but he owns no shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Read/Post Comments (10) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 15, 2010, at 9:23 AM, Fool wrote:

    Nexus one did already damage the Motorola Droid. Who needs an imitation, you may get the real thing. The viability of the free OS model is questionable.

  • Report this Comment On January 15, 2010, at 9:30 AM, Fool wrote:

    Nexus one did already damage Droid. Who wants an imitation, you may get the real thing instead. The viability of the free OS model is questionable.

  • Report this Comment On January 15, 2010, at 9:43 AM, silviacertos wrote:

    This isn't a win-win for Goog - they blew it with their partners, many who will now leave the Android OS system as soon as feasible. Leave it to Google to not consider anyone else, even their supposed partners. They're also not making such a great impression on their customers with the Google $350 early termination fees. Not a good start at all. The only thing that remains to be seen is if Goog will cut it's losses (which they should), or keep on trying...

  • Report this Comment On January 15, 2010, at 9:47 AM, Fool wrote:

    Sara mola

  • Report this Comment On January 15, 2010, at 10:03 AM, KPOM wrote:

    Who will Motorola, Samsung, Sony Ericsson and others go to if they decide to bolt Android? Windows Mobile? Call back in 2 years when WM7 finally comes out. Symbian? Only if they like an OS stuck in the last decade. Obviously HTC will stick with Android. They are making the Nexus One. The others may not like Google's presence, but perhaps that explains the low-key rollout. Remember, Droid is getting the 2.1 software, too. Any other manufacturer can use it if they want to. This is a win-win.

  • Report this Comment On January 15, 2010, at 12:26 PM, Retired31B5M wrote:

    As somebody who was one of the people who were 'first in line' to by the Nexus One - here is my perspective:

    1) Still has some rough edges. The navigation software is comparible to a Garmin I bought 5 years ago. Hopefully this is something that will be addressed in future updates. Until then, I will be using my current-model Garmin for the better features and traffic avoidance.

    2) The website selling it went way too far in terms of minimalist design. And they are hurting themselves by not offering 'add on' products with the initial purchase (screen protecters, cases, mounts, etc).

    3) I get the impression that Google rushed the phone to the market in order to start selling it at CES. As a result the accessories that people need to get full functionality (such as the car mount that automatically places the phone in GPS mode are still being developed.

    All in all I suspect that the cause of all of these issues is based on two things: First Google has no real expirence in selling hardware type products and has to learn how to do this from scratch. (Why didn't they simply use some of that huge cash stockpile and buy a company that has expierence selling electrinics online?)

    Second: Google placed way too much emphasis on selling the phone during CES. IMO they should have waited another month to do additional polishing and making sure that the accessories are availible at the same time the phone is.

  • Report this Comment On January 15, 2010, at 12:28 PM, Retired31B5M wrote:

    Oh - I forgot to mention. As a former iPhone user the Nexus One is clearly superior due to the multitasking operating system.

  • Report this Comment On January 15, 2010, at 4:20 PM, demodave wrote:

    If 20,000 units sold is truly correct, that's a laughable fail for Google.

    InfoThatHelp, I disagree that the business elites are the saviors of the Android OS, because I think the business assumptions for Blackberries is flawed: I think the narrowmindedness of the "Enterprise" IT set is what is propping up Blackberry sales. I think the same is true for Dell. If it were my choice, I would use a Mac or an iPhone for work, but I don't get that choice when working for an employer hivemind.

    Retired, I think the CES theory is a good one. Unfortunately, an execution fumble is an execution fumble, no matter how hard Google tried. Additionally, I think there was a wish/attempt to preempt the Apple event that is supposedly happening next week. That, too, is a poor reason to attempt to launch before the technology and experience are ready.

    Disclaimer: Apple fanboi, long on the stock. And yes, Apple has launched too early before, too. Think Newton. :)

    DD

  • Report this Comment On January 15, 2010, at 5:12 PM, Fool wrote:

    As I type this on my Iphone.....I will tell you oneqrea the Wall Street pundits do not understand and that is the app store concept. It is an unbelievable cash generator for Appl. But everyone seems to think 100k apps is a big lead for appl. Trust me, apps for droid will catch and pass in early 2011.

  • Report this Comment On January 30, 2010, at 9:24 AM, Austintatious53 wrote:

    RIMM is successful because they have listened to their customers and have dveloped a rock-solid security system that no other phone can match. Having 100K or 100 million apps has little value in the business world when most of them are games or other types of time-wasters. RIM needs a better browser and an improved interface, but they will continue to do well until those developments are in place. Most of the posters here are consumers and simply do not understand why businesses continue to invest in BlackBerries. The iPhone is a great consumer product but lacks the security and productivity applications business demands.

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