Google announced the long awaited Nexus One today, but the phone itself was only part of the story. Google has decided to distribute the phone exclusively through its own web store, a misguided strategy I think will ultimately backfire on them.
Frankly, I think it's a mistake for the company to get into the hardware business period, but I see their approach as widely flawed, while Google sees it as the height of innovation.
Buying a Phone on the Web
A big part of the Q&A with reporters and bloggers after the launch announcement involved the retail approach. People wondered why Google, whose core business is search and selling ads, would get into the retail business, a question that that representatives failed to adequately answer, and which to me just hangs there (with unasked questions about the phone's battery life). I believe that Google thinks their retail store is akin to the launch of the Apple App Store, a revolutionary approach to retailing, but it's really not.
Instead of having a place like Best Buy or Radio Shack where you can hold the phone in your hands, you go to a web site with no opportunity to see it anywhere live. The web experience is supposed to make up for this, but it's seems just silly to me using 3D animation to show things like the weight of the phone is akin to 53 pennies. Gee thanks, let me go count those out, put them in a bag and see how that feels. Of course, I still won't understand how it feels because holding a bag of pennies can never let me understand just how the phone feels.
People buying phones don't want pictures, no matter how "3D" they may be. They want to hold the phone. They want to try the touch keyboard. They want to press the buttons. They want to use the camera. You can't do that on the web where Google intends to offer it exclusively.
And What About the Pricing
I'm with the reporters who question Google getting into retail at all. I've written that Google is undermining its own ecosystem by marketing its own branded phone, but I'm stunned by the cost. At $529 for the unlocked phone and $179 for the initial TMobile phone (with contract; details not yet available), the phone is in line with other similar smart phones. A more intelligent approach in my view would have been to undercut the market and sell this phone way below value because I don't see selling phones as being something Google really wants to do.
Google may want to push Android innovation; compete with Apple on the iPhone or even undercut Windows Mobile, but they have no business selling phones. It's a mistake to move away from what you do best into a crowded field and I heard nothing in the presentation to convince me otherwise.
So what we have is an expensive phone, that undercuts its Android partner development system, using a Web only retail model with a silly set of pictures that are supposed to give you a brick and mortar retail experience. This is as boneheaded a strategy as I've seen since I've been following Google, and I'll go on record as saying I think it's going to fail miserably. The phone has several very nice features and it should push Apple to make some changes to the interface, but beyond that residual consumer benefit, I see very little upside for Google as a company and very much to lose.