At the beginning of the year, Supply Chain Matters commented on Google’s direct entry into the smartphone market by announcing the Nexus One phone, which was to be sold in an ‘unlocked state, available for use by consumers who would activate the phone with any wireless mobile telecommunications carrier of choice. We contexted Google’s market entry as an attempt to disinter mediate existing smartphone distribution and selling channels. We also questioned whether a significant number of consumers would be willing to pay in excess of $500 in order to procure an independent phone.  From the get go, Google experienced multiple issues related to consumer difficulties in purchasing and activating phones.  Questions were also raised on the deployment of a worldwide order channel and on consumer’s ability to easily obtain service, and contract manufacturer HTC was placed in a rather challenging position to be able to support all of these needs  from Google.

In May, Google announced that it was shutting down its worldwide Internet ordering site and would sell the Nexus One in Europe utilizing the channel of wireless provider Vodafone. Speculation from industry analysts was that Google had sold just 135,000 phones at that point.  We commented that Google’s ill conceived product marketing strategy coupled with a not well thought out supply chain fulfillment and channel partner strategy had all come home to roost.  We also stated that Google needed to invest in the processes, capabilities and people who understand all the tenets of responsive global supply chain management vs. just being disruptive for the sake of making a statement.

To close out this experiment, Google has now quietly announced via its Nexus One blog that it is discontinuing the Nexus One altogether, except for a few select markets. Google notes that customer support will still be available for current Nexus One customers. Nexus One will continue to be sold by partners including Vodafone in Europe, KT in Korea, and possibly others based on local market conditions.  The experiment of smartphone independence has come to an end, at least for now.

Perhaps this entire episode should be characterized as Google meets the reality of creating conflict in channel marketing and distribution, along with the realities of a web-based worldwide order fulfillment capability. The intent was noble, but the execution was not.

Another lesson in that age-old and tested principle, “the devil is in the details”.

Bob Ferrari