Nexus One: Really Unlocked? Enterprise Ready?
Is the Nexus One destined to be victorious in the fiercely competitive smartphone smackdown of 2010?
Though the handset is unlocked and has the backing of the Internet giant, one analyst predicts that the Nexus One may not fly off the virtual shelves of Google's Web store in the long-run.
Still, the unprecedented move by Google is bound to pay off in Google's apparent strategy to dominate the mobile ecosystem. Over the past two years Google has launched the new mobile OS Android, released the mobile phone service and app Google Voice, rolled out a new GPS turn-by-turn Android app and mapping services. It also recently started offering smartphone barcode scanning functionality and boosted its mobile advertising unit with the purchase of AdMob.
Google yesterday unveiled the new smartphone, made by HTC, and the first to run on the latest Android OS, version 2.1. The Nexus One has a 3.7-inch 800x480 touchscreen, a 1GHz Qualcomm Snapdragon processor and a 5-megapixel camera.
Though the specs are impressive, what's garnering attention is how it will be sold and advertised. The device costs $179 with a two-year contract from T-Mobile or $529 unlocked, which means it can run on multiple carriers. Verizon and Vodafone are expected to begin selling it soon. The twist is that it will only be sold online at Google's dedicated Web site.
Avi Greengart, analyst at Current Analysis, believes that long-term success of the Nexus One will hinge on how it's sold -- and he's not sure the online-only model is going to be widely adopted.
"Google is limiting Nexus One distribution to its new online store. This is not a problem for early adopters who will seek out the phone, but regular consumers shop for phones in carrier retail stores. Regular consumers are also heavily influenced by carrier advertising, and if Google does not advertise the Nexus One -- and it said during the press conference that it won't - most consumers won't know that it exists," Greengart said in a research note.
He said in addition to missing out on carrier ad campaigns, Google will also face hurdles selling the Nexus One online, as consumers like to physically touch and test out phones when considering a purchase. Additionally, there are other logistics at issue.
"Retailing is hard -- even online -- and Google has no experience in this market," said Greengart. "While it will be using distributors to manage inventory, how will it manage returns and support? Is that going to be in-house or outsourced?"
He also said the unlocked version of the Nexus One will likely have a marginal impact on the wireless sector. "The Nexus One can be bought unlocked, but in the U.S. that is largely meaningless; it will only run on T-Mobile's 3G network and will not work on Verizon Wireless or Sprint at all," he said, though that will change in the future.
For now, the Nexus One is designed for T-Mobile's 3G HSDPA network, along with European 3G networks. However, future versions of the Nexus One will be compatible with Verizon Wireless' CDMA/EV-DO network, according to Greengart. Still, he said this essentially means the Nexus One is a "T-Mobile specific phone."
Meanwhile, Greengart doesn't see the Nexus One cannibalizing Google's Android gains.
"Google doesn't make money on Android -- or even Android hardware such as the Nexus One. Google clearly would like to disintermediate the carriers if possible, but mainly to reduce their influence on hardware and software design decisions, not to make money at retail," he said. "Android 2.1 is not a huge upgrade over Android 2.0 and Google took great pains at the launch event to stress that it is not competing with its licensees."
Will the Nexus One Show Up at the Office?
In regard to if we'll see the Nexus One trickle into the enterprise, it may be too soon to tell, but it's not likely to happen on a large scale with the first version of the handset, William Stofega, analyst at IDC, told EnterpriseMobileToday.com.
"It's targeted at the consumer market so it's not surprising that it's no where near as robust in terms of security as Research In Motion's BlackBerry and I'm not sure it has the firepower otherwise to satisfy the corporate user," said Stofega.
There are also support issues on the enterprise front. "For corporations, you do really need to have support and customer service in place," said Stofega. "For the consumer it's one thing, but for the enterprise it's quite another. If something goes wrong, who are they going to call, (Google CEO) Eric Schmidt?"
Still, he thinks future versions of the Nexus One could wiggle its way into the workplace just as the iPhone did.
"Right now it's early days of the Nexus One, but in time it may come with the features and functionality enterprise needs, encryption and so on. Will we see a trickle down effect into the office at some point? That's totally possible, especially with Google. It could very well be that Android in general represents the next level of competition for the iPhone."
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