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Google Digs Up Old Direct-Sales Nexus Strategy

Google Digs Up Old Direct-Sales Nexus Strategy

Google plans to take another shot at direct sales for its line of Nexus phones -- Android smartphones that offer an unadulterated strain of the mobile OS. The plan would cut carriers out of the distribution loop, and it's similar to something Google tried years ago. That plan flopped. This time, Google will have more manufacturers as partners and more devices, but will consumers accept unsubsidized prices?

By Richard Adhikari E-Commerce Times ECT News Network
05/16/12 2:22 PM PT

Two years after its initial attempt to sell Nexus smartphones directly to consumers flopped, Google is apparently trying to revive the strategy.

This time, though, it's added a few new touches. It's going to work with up to five device manufacturers at a time to create a portfolio of Nexus-line devices that include smartphones and tablets, and it will sell direct both through its website and possibly through some retailers, The Wall Street Journal reported.

The devices will run on the next version of Android, which is expected to be called "Jellybean." They will reportedly be ready for market by Thanksgiving.

The new Nexus smartphones will apparently be sold unlocked, meaning they won't come with a wireless contract and will be able to run on different wireless networks through the use of a SIM card. Unlocked smartphones typically cost more because they don't come with carrier subsidies.

"In a sense, Google is looking to separate the control operators have over device from their control over service design," Michael Morgan, a senior analyst at ABI Research, told the E-Commerce Times. "Apple has done this to some extent, although it continues to recognize that the operators are still a very important key to handset distribution."

One Voice, One OS

Going direct could let Google keep Nexusn phones pure, reducing Android fragmentation. Phones with the Nexus brand carry pure implementations of the Android OS; in other Android phones, carriers and device manufacturers modify Android their own ways.

Android fragmentation is often exacerbated by the fact that Google's at the mercy of wireless operators when it comes to pushing OS updates to consumers. This was a point raised last month by Google engineer Jean-Baptiste Qeru on Google+. He blamed the carrier approval process.

Ultimately, Google "would like to have the device OEMs to have more control over the development of Android devices without having to worry about the slew of differentiated operator device requirements," ABI's Morgan stated.

"Having a set of devices on the market will serve to develop an ecosystem of devices with full functionality available, and it will put the onus on operators to compete on the number of functions they will support on their networks," he added.

"We test all hardware and software that goes on our network, and we test all products equally," Brenda Raney, a spokesperson for Verizon Wireless, told the E-Commerce Times. "It's that testing process that helps us provide customers with reliable service."

Direct sales might also ensure that consumers have access to all Android's features. For example, Verizon Wireless blocked an NFC (near-field communications) feature, which enables mobile payments, on the Samsung Galaxy Nexus when the device was launched on its network in December.

Getting Around the Carriers

"As iOS, BlackBerry and Android continue to offer services that were once the sole purview of the operators, such as free messaging, they are realizing that operators do not evolve their networks and service offerings at the same pace that consumers desire," ABI's Morgan pointed out. Google dusting off its direct-to-consumer plan "is the second phase of [it] looking to develop an alternative distribution channel from operators."

The first few Nexus devices in 2010 "were the trials to see if any could be sold," Morgan said. "This time around, [Google] will widen the effort to see if they can gain even more traction."

Meanwhile, "there's been a groundswell of support for getting your smartphone outside the mobile operator," Ramon Llamas, a senior research analyst at IDC, told the E-Commerce Times. "A friend who wanted a new smartphone had the choice of going to Best Buy or the carrier's store. He saved $30 by going to Best Buy. More and more people are saying they don't always have to go to the operator because the selection's there in other stores and there are deals to be had."

Google did not respond to our request to comment for this story.


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