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Google’s Nexus Strategy: Why Are Nexus Phones Not Selling Better?

Eric McBride
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The HTC Nexus One, Samsung Nexus S, and the Samsung Galaxy Nexus all have a few things in common: They are pure, unskinned Google Experience devices that are first in line to receive updates, and are tailored (in a big way) for developers. They also don’t seem to achieve the high amounts of sales/consumer attention that flagship devices from those OEMs seem to attract. Samsung recently stated in court that Galaxy Nexus sales were “so miniscule” that the phone shouldn’t be considered a threat, which leads to 2 questions: Is Google’s Nexus strategy working? Why do these amazing phones receive such little consumer attention and generate such “small” sales in comparison to flagship phones?

Sales Figures

When it comes to sales, Nexus devices have (so far) never had a reputation of achieving record breaking numbers. The first Nexus device (HTC Nexus One) was hands down one of the best devices I have ever had the pleasure of using. Yet in terms of sales, it was a total flop. While the iPhone very quickly sold 1 million units, and the Motorola Droid sold over a million within weeks after its release, the Nexus One managed to sell less than 150,000 devices after its first month. I still remember walking into a Vodafone shop in Berlin and my friend asking the salesman for “the best Android phone on the market”. His answer was the Nexus One and HTC Desire. It was no secret how great of a phone it was.

The Nexus S fared better, but certainly wasn’t a “hit” with consumers. In 6 weeks it managed to move a reported 500,000 units, which is certainly better than the Nexus One, but still small when compared to sales of other popular Android phones that were released in the same year.

The Galaxy Nexus is by far the best performing Nexus phone in terms of both functionality and sales numbers, and The Verge reports that 250 million dollars worth of the devices have been sold. That’s certainly not a bad number, but according to Samsung, it “only accounted for 0.5 percent of the market”.

That particular statement was made by Samsung attorney John Quinn during the Samsung/Apple trial yesterday, but it seems pretty clear that in court, Samsung will naturally want to minimize the success of the Galaxy Nexus. It’s still currently being debated as to whether the device “causes harm to Apple, so braggin on GNexus sales might not be the best strategy. Apple seems to believe that the device sold more than Samsung is admitting, but that’s another story altogether. One thing is certain though: No Nexus device has performed nearly as well (in sales) as a flagship device like the Galaxy S2 or S3. Why?

I believe there are a couple of reasons for that.

Marketing

The Nexus One was the first device that Google attempted to sell directly. Google is good at a lot of things, but direct sales/marketing/customer service for consumers (for hardware anyway) obviously wasn’t their strongpoint when they released the Nexus One. I never saw a commercial for the Nexus One, and if anyone had an issue with the device, emailing Google or trying to reach one of the few carriers that stocked the device was a real pain for consumers.

The Nexus One received huge amounts of media coverage from almost every tech blog on the internet. That qualifies as marketing right? Certainly. But when compared to Megan Fox using the Motorola Devour in the bathtub, it just doesn’t cut it. Both ways are effective, but  are completely different types of marketing that reach a completely different type/range of consumers.

The first time I saw a Nexus S is when Eric Schmidt (who was Google CEO at the time) pulled one out of his pocket at a conference in Berlin. It was a nice phone, but again, when compared to the attention that the GS2 and GS3 received, it was almost invisible.

The Galaxy Nexus definitely received more TV time and marketing attention than any previous Nexus device, and is the first phone to be sold directly on Google Play in the US. It’s a Nexus phone that I see people using on the train in the morning, and it makes me wonder how many of them Samsung actually sold. Unfortunately though, the Apple Vs Samsung case is pulling a bit of a blanket over the head of the device, and it could take some time before we know just how well it actually did.

Price

At the time, Android wasn’t nearly as popular with consumers as IOS, yet Nexus phones still costed the same price as the iPhone. This is a big determining factor of how well they performed, as Android has only became a serious threat to Apple (in terms of sales) since the release of the Galaxy S2. Nowadays, consumers will buy expensive Android phones due to the traction it has achieved by consumers worldwide. But just a few years ago, Android phones were simply “ wannabe iPhones”. This is no longer the case, as consumers are now embracing Android for what it actually is: a great operating system that be be found on a variety of phones from multiple manufacturers at low, mid, and high price points.

The Nexus 7 is projected to sell 8 million units in 2012. This is largely due to the low price, but that alone demonstrates that consumers are indeed willing to embrace the Nexus branding.

Arrogance, or treading carefully?

The HTC Desire was more or less the big brother of the Nexus one. Almost identical hardware, similar look, similar build quality, ect. The Galaxy Nexus is pretty much a Galaxy S2 in terms of hardware in many ways as well. So why the difference in sales? Could it be that OEMs would rather promote sales of their own skinned (Sense, Touchwiz, Blur) devices vs Google’s?

Nexus devices are a bit tricky for OEMs. To promote a Nexus device is in many ways promoting Google, not the OEM itself. If a consumer walks in a holds a Galaxy S2 and a Galaxy Nexus both running Ice Cream Sandwich, I would be willing to bet money that Samsung is crossing their fingers on them buying the GS2. Why? Because the GS2 promotes Touchwiz, which is a skin that Samsung uses to distinguish itself from other OEMs and to directly identify their devices. The Galaxy Nexus promotes Google and stock Android (although it still looks good for Samsung) look. Consumer falls in love with Touchwiz = interest in all Samsung future devices. Consumer falls in love with stock Android= more interest in Nexus devices, which can come (on paper) from Google directly or from another OEM, thus threatening their future sales to some extent.

Does Google even care?/Time to think again?

This is a tricky one. 1 year ago, I would have said Google could care less. As long as people buy smartphones and search on Google, they make their money regardless. But with the purchase of Motorola, things changed, both for Google and for OEMs. Consumers who prefer stock Android would flock to Motorola if they were to only bring out stock Android devices. In a way, OEMs promoting a Nexus device to consumers can now, to a point, be seen as pointing them slightly towards Google (and now Motorola). As much as OEMs love and profit from Android, I can see how they could view Nexus phones as a bit dangerous for the long term. But then again, most consumers probably don't even know that so many different "skins" exist (or what makes stock different than any OEM skin) do they? There are so many factors to consider.  So what’s the solution?

For me personally, there’s only one solution that’s fair: Every OEM get’s their own Nexus phone/tablet. This gives customers choice, which is ALWAYS a good thing. It also allows every OEM a chance to confidently promote their own Nexus phone while also supporting their own software (skins), and could prevent manufacturers from having the feeling that Google is playing favorites.

But again, what if a consumer prefers a HTC Nexus phone over a Sony Nexus phone? This is where OEMs will simply have to innovate, and has nothing at all to do with Google.

Conclusion

Nexus phones were a vital tool in promoting Android to OEMs, consumers, and developers. Regardless of sales, the strategy worked. Devs are now flocking to Android, OEMs rely on it, and OEMs, carriers, and consumers worldwide have turned Android into the worlds most popular operating system. Google’s Nexus 7 tablet and the 8 million projected sales for 2012 show that Nexus sales are definitely moving in the right direction, and if 2012 is indeed the year that every OEM begins releasing their own Nexus device, the Nexus brand might just be on its way to a much brighter future.

Picture credits: wallpaperstock.net

Additional Stat Sources: The Verge, Gizmodo, Engadget, Eweek, Ubergizmo, Phandroid, and Digital Trends

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Comments

Write new comment:
  • Lloyd Shelton Aug 22, 2012 Link

    I Think That It SHOULD Be CHEAPER !!!

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  • Eric McBride Aug 22, 2012 Link

    AMEN bro! That's such a huge factor in my eyes as well.

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  • Ti Mo Aug 22, 2012 Link

    I bought my GNex for 350..
    The S2 is still 379,00 on Amazon, the S3 549,00

    So it actually is pretty cheap compared to the other high class phones...

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  • Eric McBride Aug 22, 2012 Link

    That's a really good point. I also got mine for 350 on Amazon, and I would pick my GNex over the Galaxy S2 any day of the week.

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  • chinu Aug 22, 2012 Link

    here, the prizes as below.... all are non contract base...

    s2 - $500
    GNx -$600


    NOW WHAT? :-P

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  • Eric McBride Aug 22, 2012 Link

    Here in Germany and in the US, the GNex is cheaper than the S2 (in most cases) :-D

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  • chinu Aug 22, 2012 Link

    lucky u......

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  • Eric McBride Aug 22, 2012 Link

    What does the Galaxy S3 cost where you live Chinu? 600 for a GNexus is really really expensive! :-(

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  • chinu Aug 22, 2012 Link

    im from India...

    s3 costs me $750... here we dont have contract base system... all devices we get on contract free basis..... most of the high end gadgets are very expensive here.....

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  • Eric McBride Aug 22, 2012 Link

    WOW! That's pretty hardcore! Is it possible to import phones to get them a bit cheaper, or do the import taxes make it not worth it?

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  • chinu Aug 22, 2012 Link

    yeah.. its possible to import.... but all hte taxes, shiiping charges made the costs same as I get here..

    some times it goes above the cost which is present here.. :-(

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  • chinu Aug 22, 2012 Link

    i got my note for $600

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  • Eric McBride Aug 22, 2012 Link

    So the Note costs the same as the GNexus there? WOW

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  • chinu Aug 22, 2012 Link

    yeah..... pretty insane.......

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  • chinu Aug 22, 2012 Link

    whats the expected price for i-phone 5 there??

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  • Eric McBride Aug 22, 2012 Link

    Thats a tough one. Almost EVERYONE who buys an iPhone gets it subsidized, so you can eventually get it for as low as 1 Euro if you sign up for a 2 year contract. But that's if you have a very expensive contract. Most of the time at the beginning, you can get it subsidized in Germany between 1 and 240 Euros (depending on your contract). Off contract, the lowest storage model will be really expensive (600 euros+).

    I would imagine the iPhone 5 will follow the same pricing structure, or maybe even a hair cheaper because of the Galaxy S3.

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  • chinu Aug 22, 2012 Link

    oh.... thats pretty cool..... bro....

    if im going to buy my next phone, i'll ask you to send me... ill unlock it at my place.... :-)

    ill save loads of bucks of mine.... hehehehe

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  • Eric McBride Aug 22, 2012 Link

    No problem! Anything to help spread the Android love!

    But no iPhone! LOL (joking:-D)

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  • chinu Aug 22, 2012 Link

    thnx alot brother.... and no i-phone.... :-)

    only the little green dude...... ♥♥♥♥♥♥

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  • Eric McBride Aug 22, 2012 Link

    Haha!

    Sounds good bro :-)

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  • User picture
    Nick N. Aug 22, 2012 Link

    I have a SGS2 which I really like, but my NEXT phone will be a Nexus phone. The first five minutes I spent with my Nexus 7 tablet convinced me that stock Android was the only way to go.

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  • Eric McBride Aug 23, 2012 Link

    I'm leaning that way as well Nick. Only Nexus phones for me for the time being.

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  • Patrick R. Aug 23, 2012 Link

    Google should learn from Xiaomi... top spec cheap phone. Now I am considering getting their new phone. I just flashed MIUI on my GNote, SGS, Kindle Fire and I'm loving it. Looking for MIUI for my Transformer Prime now. LOL

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  • Cam charles Aug 23, 2012 Link

    i think theres two big thinks youve missed here...

    imo the reason nexus devices have "failed" is because, in aus at least and i know its true elsewhere,is that the biggest benefit of a nexus device is gone the second you buy it through a carrier, updates from google before anyone else, sure you ca buy a unlocked international version outright but (again in aus at least but elsehwere too) 90% of consumers go through a carrier, and whilst some carrier still advertise the google update thing, as a blatant lie i must add, it takes 2 seconds of googling to find the truth, imo this is bigger then the fact your guaranteed no OEM skin and if your biggest pro is wiped before purchase youve already lost.

    The bounce back though is google have woken up and have started selling direct to the public via the play store backed by a revamped call help center, its not as good as forcing carriers to smarten up with updates but its a good step in the direction of getting the phone to consumers with its biggest benefit in tact and thats pure win.


    also you mentioned that all oems should be able to make a nexus device for consumer choice, short of the behind the scenes help google offers the nexus OEM, update and price help i imagine, every OEM can already make a nexus device they have to simply choose not to skin the OS and ensure a stringent update timeline, they dont need googles backing for that they should be doing it already

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  • Dogukan Aug 23, 2012 Link

    Really a great post and I very much agree with all of the things you have mentioned. I am thinking about this "5 Nexus phones" thing. It will be great to have choices but the sales will drop because of the fact that people will select between 5 different phones.
    Seriously OEMs should publish commercials more this time if they want the phones to succeed. In my country (Turkey), the Galaxy S3 commercials and posters were everywhere when the phone came out. Right now, very few people knows about the Galaxy Nexus here lol.

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  • Eric McBride Aug 23, 2012 Link

    @Cam - That's an excellent point you made about the carriers that I totally didn't think of! The advantage of the Nexus phone is truly gone when carriers gain control of the updates. That might be another article all together! Thanks bud :-)

    And sure...OEMs could all release skinless stock devices, but don't due to the fact that skins help to identify their company and seperate it from others. I don't really like skins, but I understand why they use them.

    @Dogukan - Thanks for reading, and glad you enjoyed it!

    You're really right about the marketing. The Nexus brand needs its TV time just like every other phone. Let's hope that changes this year!

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