It was tough not to see some irony in Google's quiet admission last week that it was stopping online sales of its Nexus One smart phone and moving to "brick and mortar" retail sales. It was just this past January when Google announced that it was going to "end run" the traditional carrier-centric distribution model with an online, direct-to-the -consumer sales strategy for Nexus One. Apparently not all things can go digital.
The change in strategy was announced in a blog post by Andy Rubin, the VP of Engineering leading the Android effort. In the post, 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.
There are many important learnings from this change in strategy and it would make for a great case study in channel marketing. However, three important and fundamental concepts stand out:
(1) When designing channel strategies, it is imperative to start with the ultimate buyer and understand exactly how they wish to purchase your product or service. It has long been understood in the wireless world that consumers want a hands-on experience -- that is why there are mobile phone retailers or kiosks on practically every city block. It is unwise to dictate how you are going to sell and then expect buyers to fall into line.
(2) Channel marketers must understand the full continuum of the buyer's purchase process and decision-making from initial information gathering to post-sales service and support. Thinking through this process in the wireless space immediately identifies the immense challenge inherent in trying to sell a handset disconnected from a service plan. People are buying the ability to communicate wirelessly -- anything short of that is an incomplete solution.
(3) It is important to be sensitive to your market ecosystem to avoid channel conflict. Google's Android operating system for smart phones currently enjoys 28% market share, behind RIM's 36% and outpacing Apple's 21%. Clearly it is a successful product and it owes its share position to partnerships with Sprint (which is running the O/S on its HTC Evo 46 handset) and Verizon (which is running the O/S on the Droid Incredible). Given this, why would Google elect to compete with its partners by selling the Nexus One online, especially when the only carrier willing to offer it service is Sprint/Verizon competitor T-Mobile? It makes no sense.
One could argue that Google's strategy was hubristic. They may have felt that they were smart enough to decide that the online channel was best, disregarding customer purchasing preferences. They may have believed that their handset was so cool that it would sell disconnected from a service plan. And, they may have believed that the omnipotence of being Google allowed them to "dis" their partners by going direct-to-consumer. But as Icarus found when he flew too close to the sun, hubris results in downfall.
Reader feedback is encouraged. Please feel free to post your comments in the feedback section below. Thank you for reading!
Comments