March 16, 2010 | by Chris Smith
A post today on Silicon Alley Insider says that the Google Nexus One has been on sale for 74 days and has only sold 135,000 units. They make the comparison to the Motorola DROID and iPhone sales of their first 74 days showing that both sold around 1 million units. According to these numbers the conclusion is that the Nexus One is a “flop”. Although sales of the N1 are “disappointing”, I wouldn’t consider the N1 a flop but more of a sales model experiment; one that will eventually save consumers money.
Google introduced the the N1 as a “carrier agnostic” device that could be purchased out of contract, a sales model that is totally different to what Americans are used to. Americans are used to purchasing phones that are heavily discounted with a new contract at one of the four US carriers. Google’s idea is to offer the phone unsubsidized and let the consumer choose the carrier that they want. By not having to sign a contract for a certain term, consumers can have more control over what carrier they choose and therefore what price they will pay for their service. The major problem that this sales strategy faced was that the N1 was initially available for only one network in the US, T Mobile. Not to mention the shock factor consumers faced on the high price of the N1 that they would probably pay $199.99 for under contract.
I believe that the N1 is not an “iPhone killer” like many bloggers and media outlets tried to shove down our throats. It doesn’t have to be. Instead, the N1 and the way that it is being sold is more of a “contract killer”, something that is very much needed in the US to create more value for consumers and as well as real cell phone plan price competition. If Google continues this sales model with more phones in the future and consumers catch on to the freedom and potential cost savings of not signing a contract with carriers, the cell networks will be forced to lower out-of-contract pricing to lure these consumers. Doesn’t sound like a flop to me.