Analysts revise Nexus One sales estimates
Revised sales estimates from Goldman Sachs are predicting that Google will sell around 1 million Nexus One handsets in 2010. It seems that these figures are based mainly on estimated first week sales of 20,000 units and first month sales of 80,000 units, both of which extrapolate to around 1 million handsets in the first year, assuming that the phone continues to sell at the same rate.
We previously estimated that Google might sell 3.5 mn Nexus One units in 2010. Initial data-points were disappointing, possibly due to limited marketing and customer service challenges. Flurry estimated (based on mobile traffic) that Google sold 20,000 in the first week, and 80,000 in the first month, both annualizing to 1.0 mn. We forecast that Google sells 1.0 mn Nexus One units in FY2010, benefiting from US carriers other than T-Mobile, and non-US carriers such as Vodafone, promoting the device too, but suffering from limited marketing activity. We assume that Google rolls out a second Nexus handset, markets it more aggressively, and makes it available offline, and therefore forecast that Google sells 2 mn handsets per year in 2011 and future years. — Goldman Sachs
Sales of the device may be down on what analysts were forecasting, but we can only speculate as to whether or not the Nexus One is meeting Google’s sales targets. Andy Rubin, Google’s VP of Engineering, said in an interview in January that the company expected to sell around 150,000 handsets by the end of the year, an almost ridiculously small number considering the potential size of the smartphone market. It’s likely that he was being deliberately conservative in his estimate but at the same time it also gives a clue to the scope of Google’s ambitions for the phone. It seems clear from the way that Google launched the Nexus One that it isn’t a device which the company expected to sell in large volume.
When Steve Jobs announced the iPhone back on January 9th 2007 he clearly stated Apple’s ambition to capture a 1% share of the smartphone market with sales of 10 million handsets in 2008. The announcement followed months of rumour and speculation and the device eventually went on sale on June 29th in the US after 5 months of marketing, available to buy online or through Apple and AT&T retail outlets.
Google by contrast both announced and launched the Nexus One on the same day with no advanced marketing campaign, no pre-sales, no sales forecasts and no opportunity for customers to get their hands on the device before buying. The announcement did follow a frenzy of speculation from tech writers on how a phone from Google could impact the industry, but the launch was decidedly low key if Google’s intention was to take the smartphone market by storm. Whilst a Google branded piece of hardware was a first for the company, their approach to the project displays all the hallmarks of their philosophy of development by iteration. It fits the company’s culture to take the same approach to hardware as they have to software, whereby they launch an initial concept and then continuously iterate new features and improvements as their user base expands. With the announcement of an Android phone store, which currently has just one model for sale - the Nexus One, it’s clear that we’re seeing the first of many iterations of Google’s new smartphone distribution model.
The Nexus One has been Google’s chance to get the systems up and running, iron out early problems with customer support and firmware issues whist preparing for the more important step of extending the phone store to include more devices, carriers and territories. What Google is really interested in is extending the influence of Android as a mobile platform and they won’t be pinning their hopes on any single device to do this.
But whichever way you look at it, Google’s intentions in deciding to sell their own branded handsets still seem a little conflicted. The company has said that it has no intention of becoming a competitor to other Android hardware manufacturers, but it’s difficult to see how this will be worked out in practice. Just a couple of months after Google launched the HTC manufactured Nexus One, HTC are launching the virtually identical HTC Desire which is bound to have an impact on potential Nexus One sales. Google may take the view this is a positive for consumer choice and more potential Android users for them but the fact remains that the Desire directly competes with their own hardware.
What this highlights is the challenge that Google faces in balancing it’s own interests with the interests of it’s manufacturing partners whilst at the same time delivering clear and compelling choice to consumers. Ultimately it will be overall Android phone-store sales figures that are the important measure for Google rather than sales figures of individual handsets, but exactly how the company arrives at that point, and what role the Nexus range will play in this remains to be seen.
