I think that it would be appropriate to remind that the phone is made by HTC, and that the only thing it’s got from Google is the name, a cardboard box (which is still made in HTC’s style, and coloured by Google), and a logo on the battery cover.
When talking about positioning we should first determine user categories for whom the phone was created and who may be interested in it. Let’s start by dividing the market into two major categories – countries where the device is officially available, and all other markets. Given that the Nexus One is officially sold in the US, UK, Singapore and few other countries, and can be purchased up-front without a contract, its export to other regions of the world become a matter of time. If you check your local ebay store you will see numerous Nexuses offered by American and local sellers. There is a big difference with the gray market model of the first generation Apple iPhone. When the iPhone was first released it was only available on the AT&T contract. It has not been hacked for few months, then a complex method of using cloned SIM-cards became available, and only after that the software was hacked on a program level. Difficulties with breaking the software and ease of buying a subsidized device have created a small gray market outside the United States in the first few months. Once a way was found to un-tie the iPhone from the AT&T, this market grew phenomenally, while maintaining reasonably low price of the device.
Let’s look at the potential users from countries where Nexus One is sold officially.What can the device offer to them? Firstly, these are the users who are not tied with any operator contracts, who buy phones at a full market price, and who choose the latest and most interesting offers. As a rule, these are phones with high price tags. There are not that many people in this group, but Nexus One has all the chances to meet their expectations and attract genuine interest. The fact that the handheld is advertised as Google’s first phone, it is manufacturer by a reputable company, it runs on the latest version of Android, and has some other wow factors makes the device very attractive. Nexus One offers its owners both a cool image and advanced technology. This is exactly the same mix we have seen when the iPhone was first launched. A subsidised version of Nexus One is only available to the US buyers on a T-Mobile contract. This is not that interesting for the majority of buyers, as it is usually impossible to change the existing contract and get a phone at a lower price.
Nexus One buyers can be divided into two major categories. On one side there are geeks, those who understand why they need Android, how they will use it, and why they need the latest version of the OS. There are not that many such buyers. It’s a relatively small niche, which is reflected by the Android market share. The sales grow steadily, but slowly. Therefore, geeks should not be considered as a large enough and visible market for the Nexus One.
On the other side are those buyers who choose the product based on its brand, image and ‘cool’ factor. Traditionally, there are many people in this category,which should theoretically be enough to make the Nexus One a hit. Price is one of the key factors here, because the image is reinforced by the value of the product, and the higher it is, the less sales can be expected, which is logical. Nexus Oneis aimed for the upper price segment and is offered in the U.S. at the highest price. Therefore, the second category of consumers in the US is not large enough. This is a very niche market, and Google must understand that. In one of the early interviews company’s representative said that they would be happy if 150,000 devices were sold. For a comparison, about 250,000 Motorola DROIDs have been sold in the US during the first week. Mostly due to the aggressive marketing, and subsidies from the carrier. Estimated Nexus One sales during the first week were only about 20,000 devices. This number looks real, as the niche in the U.S. is estimated to be about 80-100 thousand devices. And even Google’s name cannot make the average consumer pay the full price for the deviceand join the Android community.
The situation is quite different in countries where the device is not sold officially, including Australia. Forbidden fruit is sweet and delivers stunning results. Geeks category remains at the same level (percentage of all buyers is roughly the same for all countries), but the ‘cool’ category grows dramatically, which ensures maximum sales. Devices with the similar functionality usually cost way more than $US529 + delivery charges, which makes Nexus One a very attractive option. For those who cannot order or bring the phone themselves, resellers will offer multiple options. Lack of official guarantee will not stop interested buyers, because price / quality ratio for this product is maximized. Additionally, a ‘cool’ factor will have a positive impact on sales. To wrap this up, we expect Nexus One to be noticeable, but it is unlikely to become the bestseller of all times.
The model will be of interest to those who used HTC’s products in the past, know them, and perhaps, had planned to make a transition from Windows Mobile to Android. Nexus One offers a good chance to do so. Lack of HTC’s Sense is a minus for the mass market. The product is not as simple and functional as it could be. This is a good device to try Android, but don’t expect something extraordinary.
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Awesome! Just got a new phone and I can read your blog on my phone, it didn’t work on my old one