The Nexus One had an outstanding amount of hype prior to its release – and rightfully so – but sales of Google’s first phone in their new distribution channel haven’t taken off and analysts are noticing. Goldman Sachs has slashed their original estimates of 3.5 million units in 2010 to a paltry 1 million. Even worse, if/when the company launches the Nexus Two and markets it more aggressively both on and offline, they’re only predicting annual sales of 2 million handsets:
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
You could easily say that this isn’t about generating handset sales but instead establishing a new distribution model and if you did, you might be right. But it doesn’t take away from the fact that the pre-announcement hype and post-launch sales haven’t been playing in the same ballpark.
And then you have what Andy Rubin would say – that the company hoped to sell 150,000 units and would consider that a success. Was he just being modest in hopes of crushing those estimates? Perhaps. But clearly the company hasn’t pushed the Nexus One to its limits. They even ran a SuperBowl spot solely to promote Google Search, a product that the entire universe knows about, while allowing the Nexus One to live on in offline ambiguity.
As for the Nexus Two and predicted sales? I think it totally depends on how hard Google decides to push the device, if their new “distribution model” gains a bit more focus, and whether or not they get more carriers on board. Right now they only have T-Mobile USA committed to offering the Nexus One through their site although both Verizon and Vodafone committed on launch day – still no offerings from them. And of course you’ve also got branded versions of the Nexus One, dubbed HTC Desire (with some improvements), hitting select markets.
Let’s face it though – 1 million handsets isn’t bad for what by all accounts seems more like a “test” than anything else. And if Google continues to “test” with the Nexus Two I would consider 2 million a success as well. But if they ever decide to kick things into a higher gear, I think that 2 million could not only easily be beaten in 2011 but probably doubled and beyond.