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Tuesday, April 27, 2010 7:15 AM/EST

Why Google Shelved the Nexus One on Verizon

If you're a true Google watcher, by now you've seen the news that Google nixed its agreement to put its Nexus One smartphone on Verizon Wireless' network of 90 million-plus users.

This clearly deals a blow to Google's hopes for expanding the device, which it sells solely through its Webstore. So now the only major question to be entertained is: why? Why did Google (or Verizon, if you're of that school of thought) do this?

Journalists, bloggers and pundits are hurling around different reasons. Before I get into them, my gut was that the Nexus One, despite Google's claims to the contrary, just didn't sell well enough.

Then here comes this sexy HTC Incredible, boasting the same size and quality of display, the same operating system version, Android 2.1, and the same 1 GHz processor.

In limited testing, I've come to find the Incredible is just a better Nexus One, boasting a better camera (8 megapixels to 5 MP on the Nexus One), and a richer user interface with the seven palette HTC Sense experience.

So it makes no sense for Verizon to support the Nexus One when the Incredible will run right over it. It would cost more money for both Verizon and Google to support it, even though Google exclusively sells it.

Someone at Google or Verizon made the decision, but which side did so is unclear. Google positioned this hard blow to the Nexus One in a soft light, noting:

We won't be selling a Nexus One with Verizon, and this is a reflection of the amazing innovation happening across the open Android ecosystem. Verizon Wireless customers who want an Android phone with the power of the Nexus One can get the Droid Incredible by HTC.

Indeed, the Nexus One Website, which used to advertise the gadget going to Verizon in the spring, now points users toward the Incredible, which goes on sale April 29:

Nexus One Incredible.png

Here is what others are saying about it:

Wall Street Journal: "After lackluster sales, it was Google that decided to pull the plug on a CDMA version of the Nexus One that would have worked on Verizon's network, according to a person familiar with the matter."

BGC Partners analyst Colin Gillis, via Bloomberg: "The breakdown of the deal signals Verizon may view Google as a competitor rather than a partner when it comes to Nexus One sales, said Gillis."

I'm not sure I buy that theory. Here's one I do buy:

TechCrunch: "Others will see this as Verizon fearing Google entering its own space. If that's the case, why agree to partner with Google in the first place? And why be more afraid now when sales through Google itself don't look that strong? No, the real reason Verizon is dumping the Nexus One is much easier to understand: There's simply a better Android phone coming shortly."

However, TechCrunch also assumes this was Verizon's move and that's where I'm having trouble.

Why have Google announce this move with sugarcoating we can all see though instead of saying flat-out that it won't support the Nexus One? Presumably to save face and to keep the Android on Verizon innovation and marketing shop humming.

Perhaps. Verizon is the best network on which Google can move the Android needle forward versus the iPhone, so Verizon wears the pants in this relationship. If it doesn't want Google releasing phones that compete with it, then Google won't or can't.

Of course, it could just be that this was just a practical technological roadmap decision and not a business grudgematch pitting Verizon's heft first the fledgling Google Webstore.

In other words, the Incredible just cannibalized the Nexus One on Verizon.

How do you see it?

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Comments (19)

This may be a possibility, but I am not sure. If you think about it Google has put itself in the position of competing against it's own OS. Why would HTC or Motorola want to continue development on the phone when Google itself will be competing against them? I think Google realized that if it really wants to build partners that use the Android OS, then it needs to step out of the hardware space and give these other manufactures the chance to survive without Google in the way. If you look at other manufacturers like Sony and Panasonic, they really don't have store fronts going up all over the place to compete against Best Buy and other places that sell their products, why would Sony or Panasonic want to crush their distributors? I think the same holds true for Google, the Nexus One was a mistake that sent a signal to other distributors of the OS that maybe they shouldn't invest in the Android OS if there is a chance that Google will just squash them out of the business. Look at Microsoft, to this day they don't make a computer themselves because they wouldn't want to push Dell, Toshiba, Asus and others out of the space of being a distributor/manufacturer to their software. If Google never makes another piece of hardware then my theory is probably true.

Clint Boulton Author Profile Page:

possible, though google may stil sell android or chrome os tablets through the webstore. remember, the ipad was sold without users getting first hand knowledge of them.

John Watson :


There is still a demand for a phone directly from Google. Just becuase the incredible came out and is marginally better does not change that. Also, other folks out there want the stock android experience - which is undoubtedly getting better over time and getting better much faster than the majority of phones made by Motorola,Samsung and other phone OEMs.

James :

I think you summed it up in one sentence:

"In other words, the Incredible just cannibalized the Nexus One on Verizon."

With the flurry of new Android based phones being released on Verizon I didn't see the need for the Nexus One. Clearly the bigwigs at Verizon and Google thought the same. I wanted the Nexus One, solely because I'm a Google fanatic. If all I can get is the Incredible, which specs out better, and has the SenseUI, then so be it.

David :

Could it be a simple as the problems T-mobile users were experiencing on the Nexus One, problems Google blamed on T-Mobile's network, really were a problem with the radio in the Nexus One; and their fear was a release on Verizon, which would dwarf the T-Mobile release, would expose them even more?

"cannibalized" is a bit harsh - Nexus is more or less old news - It came out in January, now it's almost May. Big Red gets a great Android phone made by HTC in the Incredible. That's a win for Google/HTC too :-)

Clint Boulton Author Profile Page:

Samuel:

A fair point.

BW :

Here is my theory... Incredible is already better then Nexus one and forthcoming iPhone HD has far better features. Nexus One looked great in Jan, but in May it won't look that good. So launching nexus one now if no good, so Google canceled it and kept great partnership with Verizon, but they might be working on better version of Nexus One (Maybe Nexus Two) which will launch right before iPhone HD that way Google will be strongly placed against their real rival.

Brad Durbin :

IT could also be, as suggested, a matter of support. Make available a phone to 90 million people and there are bound to be support calls.

And if it is Big G's decisions not to offer support, then so be it, that's their business decision. Verizon is equipped to handle support, but one can see that Big Red only wants to support phones they sell in stores (who knows, maybe to up sell accessories and plans at the same time), so why should Google jeopardize their name sake phone on people neededing support.

In other words, sales aside, Google wanted to make a kick-ass phone. And they did- Congrats!

Now they paved the way for others spring board off it. Just think about it - How many people have heard of the new Google Phone? (sales aside again - more and more people are at least hearing of it, and are asking questions.) Android is growing.
And more people are actually liking and accepting of Android.

And to the benefit of Phone manufacturers. No more expensive OS licenses. They are freed from contracts. They can build better hardware because they are in charge...(mostly - still need the 4 buttons and d-pad)...

But if Google didn't step out front and take the bullet, then who would? MS, BB, Nokia, Palm?

The old saying, "you can tell a pioneer by the arrows in their back", and everyone what quick to criticize Google, but at least the news spread...

So what if Nexus sales are less than Apples, at least the Android name is out there and people are aware. Now it's up to the manufacturers to improve upon Googles development. People will choose what their taste and budget allow. Now there will be more to choose from.

T Osinubi :

Well if the case of Verizon not carrying the phone is due to the impending debut of the HTC DROID Incredible, wouldnt that also mean that Sprint may decide not to carry the Nexus One due to the summer debut of the HTC EVO 4G?

Interesting that Nexus One has only sold a low number of units on Tmobile, though the phone has been discounted with new service subscription. Does this reflect on Tmobile as a network or Nexus One as a phone? I say this because it appears that Tmobile did not see the subscriber boost that AT&T received from the iphone when it debuted.

Tan :

From a biz perspective, having no n1 for VZW is really interesting and has many different views. Smartphone development out paced the cdma n1 development - I think. The fact that there is no need for the verizon n1 might indeed be due to cannibalization from the DI coming out soon.

I would think that the cdma n1 will most likely still come out for sprint because sprint is lacking in the smartphone arena when it comes to android phones (newer ones). The google experience that a cdma n1 can help sprints business even the the evo 4g is coming out.

With that said, it would be really interesting to see if the spring n1 will be able to ported to the verizon network.

I look at the Nexus One in two ways. First, the Nexus One is primarily in the hands of geeks (a point I'm certain is not lost at Google)... Second, the Nexus One is a "point maker." Google launched it not to be an iPhone killer, they did so, in my opinion, to prove that Android is better than the iPhone OS.

But back to my first point... the Nexus One in the hands of a few 90,000 geek hands has got to be a great test bed and potentially the perfect beta testing group Google has out there. And with that environment when Android 2.2 is released, it will first be on the 90k+ Nexus Ones; with a knowledgable user base to explain to Google what they got right/wrong.

but that's just my two cents...

Bruce McL :

Verizon's goal for the initial listing was to get Verizon customers to either buy a Droid or keep what they have. The "Nexus One coming soon" part was to keep their own customers from switching to AT&T or T-Mo. Now that Verizon has a comparable phone to sell, they no longer need to lie about the Nexus One.

The Verizon area on the Nexus One web page seems like ad space that Google sold to Verizon. When you see, "ads presented by Google," on a web page, do you believe the ads?

mjd :

@John Watson

I agree. I'm tired of telcos bloating phones with their extra crap. I want a nice clean, vanilla Google experience that can receive Android updates as soon as they're released. The fact that the Incredible is out doesn't help me.

boomaga :

For those who don't know, HTC manufactures the Nexus One as well as the Incredible.

Good attempt by Google, it was their first shot at the market. I'm interested to see what they come up next and hopefully they've gained some knowledge.

Zack :

I had prepurchased the N1 car dock and had to call up HTC to schedule a return for it. While on the phone I learned two things. First of all, the reps were surprised to hear Google had taken the Verizon N1 off the phone page all together. Second, they were confident the N1 for Verizon WILL be coming out, possibly this summer along with the Sprint one. Which makes sense. If they've already been manufactured, might as well try to sell them, no? I still prefer the Nexus One. I think it looks more stylish, and the car dock for it is nicer than the one they're going to offer with the Incredible. Oh, and by the way, the Incredible does NOT have 8 gigs of internal memory, it comes with an 8 gig MicroSD card preinstalled. Official specs still show 512 megs of RAM and 512 megs of ROM.

MarkHolberg :

My gut feeling is Verizon wants to maintain the status quo of subsidized phones and offer VZ versions of Andriod devices only via their sales channel. The Nexus1 is basically the same for either T-Mobile or AT&T. Nothing exclusive there.

Doug :

Google's goal for the Nexus One was to drive growth in the market for the Android OS. Google essentially turbo charged HTC by jointly developing the Nexus One with them, and look what happened... the HTC Incredible.

If you look at the percentage growth of Android OS compared to iPhone OS for the past few quarters, you can see that Google is achieving rapid uptake of Android in the marketplace.

Microsoft doesn't need to sell hardware to be the dominant consumer OS on computers. Google doesn't need to sell hardware to be one of the dominate OS'es for mobile platforms.

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