Chocolate Factory pulls plug on Googlephone webstore

How much crow can one phone seller eat?


Google has told the world it will stop selling the Nexus One from the online store it launched in tandem with the so-called "superphone" less than six months ago.

With a Friday morning blog post, Android project lead Andy Rubin announced that as it launches the Googlephone in additional countries, it will distribute device through existing retail channels - and that once enough phones reach enough stores, it will no longer offer the handset online.

"As with every innovation, some parts worked better than others," Rubin writes. "While the global adoption of the Android platform has exceeded our expectations, the web store has not. It’s remained a niche channel for early adopters, but it’s clear that many customers like a hands-on experience before buying a phone, and they also want a wide range of service plans to chose from."

Google's online phone store will morph into a site where the company will "showcase a variety of Android phones available globally."

When Google announced the Nexus One in early January and began selling it online - and only online - it offered an unlocked version of the phone at full price and a subsidized phone in tandem with service from fourth-place US wireless carrier T-Mobile. T-Mobile was the only carrier actively involved with the store, but Google said that sometime this spring, number one US carrier Verzion would join the store, as would European carrier Vodafone.

At the time, Google said it was creating some sort of revolutionary new channel for smartphones, and it insisted that despite selling a Google-branded phone from its own online store, it was not in competition with existing Android partners.

Rubin then said that carriers would join the store for certain "efficiencies." Google's direct channel would cut out all sorts of overhead, he said. "[Operators] just want to sell service plans," he explained. "This [web store] enables them to reach consumers very efficiently."

But according to at least one report, existing Android partners Verzion and Motorola were "miffed" with Google's new channel, and late last month, Verizon Wireless and Vodafone, a part owner of Verizon Wireless, reversed their plans to join the store. Vodafone is still committed to selling plans in tandem with the Nexus One, but it will do so solely through European retail stores.

And now, Google will apply this same retail setup to additional countries. "As we make Nexus One available in more countries we’ll follow the same model we’ve adopted in Europe, where we're working with partners to offer Nexus One to consumers through existing retail channels. We’ll shift to a similar model globally," Rubin says.

And this will see the end of the webstore.

"Once we have increased the availability of Nexus One devices in stores, we'll stop selling handsets via the web store, and will instead use it as an online store window to showcase a variety of Android phones available globally."

With his post, Rubin indicates that Google isn't happy with sales via the web, but at launch, he said the company would be happy to sell "about 150,000" devices. Analysts estimate that sales have topped 500,000 - a meagre sum, but more than 150,000.

Today's announcement isn't about lackluster sales. It's about the carriers telling Google that if it doesn't sell the phone through existing channels, it can't count on their support for all the other Android phones on the market. The rest of the Android market is actually doing quite well. In the first quarter, according to NPD, more Android phones were sold in the US than iPhones.

The Nexus One carries the Google brand, and the company has acknowledged it played a bigger role in the development of the phone that it did with previous Android phones. It even went so far as to say that the software on the Nexus One provided "the best Google experience," hailing it as a "superphone." But the company insisted it played no role in the design of the hardware - the phone is manufactured by the Taiwanese outfit HTC.

Prior to the phone's debut, Rubin denied its existence by saying that Google had no intention of making hardware and that it wouldn't compete with its customers, meaning Android partners. And the day the phone launched, Google painted the Nexus One and its new webstore as ways in which it was reaching new levels of harmony with its partners.

"It's a partnership-based business," Rubin said. "We partnered with the guys that have joined us today to build great technology." Both HTC and Motorola joined Rubin on stage at the Googleplex that day, but you got the impression that Motorola co-CEO Sanjay Jha didn't have his heart it. He turned up 45 minutes late.

"One of the questions we asked ourselves some time ago was: 'What if we worked even more closely with our partners to bring devices to market which are going to help us showcase very, very quickly the great software technology that we're working on here at Google?' We've done just that," Google vice president of product management Mario Queiroz said that day, as he unveiled the Nexus One.

But in working "even more closely" with HTC, Google was pushing other partners away. At the time, Verizon and Motorola and Vodafone felt they had no choice but to grin and bear it. But we now know how they really felt. And how much power they continue to wield. ®


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