Image: Google Nexus One
Jeff Chiu  /  AP
Google will ultimately stop selling its Nexus One phone via the Web, instead looking to retail channels where customers can get in-person help.
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msnbc.com
updated 5/14/2010 4:02:03 PM ET 2010-05-14T20:02:03

Google said Friday its unique effort to sell the company's Nexus One smartphone via the Web only has not been successful, and that it will resort to more traditional means — retail stores —to sell the device, considered a competitor to Apple's popular iPhone.

"As with every innovation, some parts worked better than others," said Andy Rubin, Google's vice president of engineering on a company blog. "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."

The lack of hands-on help, too, may have also been a factor, with many early purchasers frustrated by not enough customer service over the phone and Web. Rubin told The Wall Street Journal then that the company "needs to get better at customer service."

Google has positioned the Nexus One as a "super" phone that is a cut above the iPhone, using Google's Android open-source operating system. Android is also being used on many other phones now, making it more difficult for a device like the Nexus One to stand out, much less be noticed by being available only on the Web.

Rubin said in his posting that "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."

The unsubsidized version of the phone, made by HTC, sells for $529 through Google's website. On T-Mobile, the Nexus One costs $179 with a two-year contract. The phone also runs on AT&T's network, but the carrier does not subsidize the cost of the Nexus One as it does most of its other phones.

Friday's decision came days after Sprint reversed its decision to carry the Nexus One, saying it would instead concentrate on a new HTC phone, the Evo, which will run on Sprint's 4G, or fourth-generation network. It was rumored that Verizon Wireless, the biggest network in the United States, would offer the Nexus One, but that has not happened.

Analysts said the decision by Google is not surprising.

"As I noted when Google first introduced this strategy, consumers shop at retail, and without extensive advertising, most consumers never discovered that the Nexus One existed in the first place," said Avi Greengart, consumer devices research director for Current Analysis.

"In addition to being a terrible distribution decision, the online channel seemed to have been designed to (circumvent) carriers — the very partners Google needs to promote Android overall. The whole Nexus One endeavor was a bad idea that should never have been launched in the first place. The only good news here is that Google is reversing course and killing it."

Ross Rubin, director of industry analysis for The NPD Group research firm, said the Nexus One was "the subject of two experiments — to sell a smartphone across carriers without their active involvement, and to sell them exclusively online.

"However, it only appeared for two of the four major U.S. carriers, and online distribution is responsible for only about a tenth of cell phone sales in the U.S., which made it difficult to create high volume, especially unsubsidized."

At this point, he said, "it would be difficult for the Nexus One to compete against Android devices with better specifications such as the Droid Incredible on Verizon and the forthcoming Evo 4G on Sprint."

The phone "may fare better in other countries as Google offers it there by partnering more with other carriers," he said.

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