Mobility News

Google Nexus One Problems Mount, From Fees To Distribution

Chad Berndtson

Here are some of the problems that have emerged for Google at the outset of Nexus One sales this month:

1. Customer service

At present, Google offers e-mail and support forums for Nexus One users to get their questions answered. But some customer have ripped Google in those forums for not providing call numbers and more thorough help services, and have even turned to T-Mobile and Nexus One manufacturer HTC for assistance instead. Google has been acknowledging individual comments in the forums, and Google's Andy Rubin has also been publicly saying that Google will "get better at customer service."

2. Early termination fees

As detailed in The Wall Street Journal and other news sources, Google charges a hefty $550 termination fee to customers if they cancel their Nexus One contracts in the first year and a half of a two-year contract. That rule applies to the T-Mobile-carried version of the phone, and Google's fee is on top of early termination fees T-Mobile already charges. A Google spokesperson told the Journal that early termination fees are "standard practice." But with early termination fees under so much government scrutiny at present, it might behoove Google to go against "standard practice," especially when it's doing that in so many other aspects of smartphone retail.

3. Distribution

Google has made clear it's going to sell the Nexus One direct from its online retail store, and, at least immediately, not employ the help of resellers or third-party retailers. In responding to questions about that distribution strategy, Google did leave the door open for future reseller possibilities, especially if it intends Nexus One as an enterprise device down the line. But plenty of solution providers have wondered why Google would waste an opportunity to reshape the mobile channel, when it has so much brand equity already.

4. Software development

One of the biggest knocks from the developer community on Nexus One was that Google hadn't yet provided a Software Developers Kit (SDK) for Android 2.1, the latest version of Google's Android mobile OS and the guts of the Nexus One phone. Google changed that Tuesday with the release of the Android 2.1 SDK, saying in a post to the Android Community blog that the SDK "is a minor platform release deployable with Android-powered handsets starting in January 2010."

5. Lukewarm sales projections

Google's Nexus One could be a game-changer, but early signs are that it won't be enough to make more than a dent in Apple's iPhone empire or be an immediate contender for smartphone supremacy in the short-term. That won't matter so much to Google as both the continued spread of its Android OS -- seen on some of the 10 Coolest Smartphones of 2009-- and the success of its retail operation, for which Nexus One is apparently only the beginning.

Still, some of the early analyst projections for Nexus One sales have been less than surprising. Doug Anmuth, an analyst with Barclays Capital, is among those predicting Nexus One sales of between 5 and 6 million units in 2010. Not exactly a failure for Google, but a far cry from the 36 million-plus iPhones most analysts see Apple moving this year, and less than half of the 13 million Anmuth projects for Motorola smartphones. There are a few ways to look at that number -- as either a fraction of what Apple and Motorola might do, or a gain against the iPhone compared to what previous Android-smartphones pulled off.

No matter how you slice it, Google's ensured itself a presence in mobile and smartphones with all the subtlety of a car alarm. Whether that's to Google's benefit or detriment is where the debate now begins.

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