Google Nexus One: Growing pains or meltdown?

It's been over a week since Google launched its Nexus One smartphone, and the results are in. What happens when a company whose expertise lies in search and advertising decides to jump into the snakepit that is the cellphone business? It's not pretty.

A "nexus" is a means of communication between things linked in a series. The problem here? It's hard to make a connection between Google's usual practice of giving away free services on the Web while selling ads — and developing a cellphone operating system and marketing handsets that cost $530 unlocked ($179 with a 2-year T-Mobile contract). There's a missing link here. For Google to think it could just jump right in is just downright naïve.


Rocky Beginnings

Google's hands-off policy didn't work well from the start. Details and pictures of the secret phone were leaked by Google employees weeks before launch. Then there was the awkward press conference, where founders Sergei and Larry didn't think it was important enough to show up, the speakers were ill-prepared, the surroundings amateurish, and the entire atmosphere virtually enthusiasm-free. Perhaps Google thought giving free phones to all the press attendees would smooth things over, which it did to an extent, judging from the consistently fawning reviews of the Nexus One.

That's not to say the Nexus One is not a good phone. It is. It's not a great phone, though, albeit it's the best cellphone running the Android OS. Count its blessings: It has a great screen, it has an attractive rounded design, its 1GHz Snapdragon CPU is fast, it has an OLED screen that's second to none, and it multitasks Google's apps such as Gmail and Google Voice with an aplomb not seen on any other cellphone. The problem is not in the hardware or software. The problem is Google's lack of support, promotion and enthusiasm for the product.


Brutal Blowback

So, the company's found itself in a firestorm of criticism. Here's a representative sample, from Ron Enderle, an independent analyst of the Enderle Group: "This is an epic failure for Google. It tried to create an Apple-like experience, but it's so far off from the Apple experience, it's not even on the same planet." Reacting to the disparagement, Google's stock plummets more than 8%.

Firestorm, indeed. Add Google's email-it-in support of the Nexus One to almost nonexistent advertising for the phone and a glut of way-cool Android phones already on the market, and it's no surprise the company sold less than a 10th (20,000) the number of Motorola Droid phones sold (250,000) during the first week after its launch. Click the following graphic to see an enlarged view comparing first-week sales:

NexusOne_FirstWeekSalesComparison_Table-resized-600.png

What was Google thinking? Today, when we tried out Google's online purchasing routine for the phone, all we got was a crash. "Oops," chirps Google's error message. "We encountered [sic] unexpected error processing your request. Please try again in a few minutes." There's even a grammatical error in the error message. Worse, when smartphone beginners have trouble with their shiny new Nexus Ones, their attempts to contact Google result in auto-generated promises of a return e-mail within a few days. A phone, without phone support? Now that's innovation.


Can of Worms

The most frustrating part of this nightmare scenario is, Google means well. Sticking to its motto, "Don't be evil," it wants to leverage its open-source, customizable Android operating system, opening it to all comers, making it so anyone can write software without the kind of encumbrances encountered with Apple's clumsy App Store approval process. But that seems to be backfiring on Google, too. Without Apple's fine-toothed comb of an approval process, the result is apps like the one recently unleashed by mistake, snagging user's bank passwords in an appalling breach of security. Maybe Google's wide-open app development process is not the best way to go.

This looks bad. But Google is just going through some growing pains. The company knows how to innovate, and has plenty of cash. Some analysts are still saying Google will sell 5 to 6 million Nexus One phones this year. The Nexus Two will be even better. Working against it is Google's pride in publicly beta-testing all of its products. But by their nature cellphones can't be publicly beta-tested.

Based on the experience so far, though, maybe Google should put a big "BETA" stamp on every Nexus One. Unfortunately, when you're competing against products that are among the most polished and innovative devices ever conceived, BETA won't do. There's an updated iPhone on the way, Dell's getting in on the smartphone game, the bombardment of new Android phones is about to get intense, and all smartphones are about to face serious competition from tablet computers. A tough market is about to become the toughest it's ever been.

Good luck with that, Google.