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Google Nexus One Sales Not Terrific

Calling the new Google phone “the most controversial and confusing Android handset launch to date,” the mobile application market research firm Flurry published sales estimates that indicate first-week sales of the much-anticipated Nexus One have been disappointing.

Selling the device, based on its Android mobile operating system, online directly to consumers, Google Inc. (GOOG) has moved only about 20,500 of the new phones so far, Flurry claims. By comparison, the Droid, manufactured by Motorola Inc. (MOT) and marketed by Verizon Wireless (VZ) with an unprecedented $100 million advertising blitz, has been a fly-off-the-shelves success.

“Nexus One was outsold by Droid by more than 12 times, myTouch 3G by 3 times and iPhone 3GS by a staggering 80 times,” said Flurry. The firm estimates handset sales by extrapolating from its monitoring of usage of more than 10,000 applications on the iPhone and Android platforms.

To be sure, Google still sees itself as a search-and-advertising company, not a retail seller of mobile devices, and the company’s goals for the Nexus are thought to be modest. Vice president of engineering, Andy Rubin, told GigaOm earlier this month that, “People shouldn’t focus too much on the device. What’s more important is the strategy behind the devices.”

By selling direct to users, however – in either an unlocked version, at $529, or for $179 with a T-Mobile USA contract – Google has apparently devised a confusing marketing model that has been hampered by perceptions that the Google phone is not the revolutionary device hard-core device geeks were looking for. Google has also instituted a distinctly carrier-like policy on returns, charging a whopping $550 in early termination fees ($350 from Google and $200 from T-Mobile).

What’s more, online forums have been busy with complaints about the spotty customer support for the Nexus One.

“While Google, in an effort to avoid channel conflict with T-Mobile, appears to have set the direct-to-consumer price for the handset at over $500 dollars,” Flurry explained in its release tabulating the first-week sales figures, “the high price point combined with the fact that the handset is only considered an ‘evolutionary’ improvement over previous Android devices, indicates that Google did not take the steps to maximize first week sales.”

Of course, if any company can weather a couple of initial weeks of less-than-terrific sales numbers, it’s Google, which is expected to report 2009 revenues upward of $20 billion when it announces its fourth-quarter earnings next week.


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