Watch CBSN Live

Google Has Weaker Brand than Many Think, Given Nexus One Sales

Many see Google (GOOG) as one of the great brands of the Internet age. And that is true -- to an extent. However, as estimates of its early Nexus One smartphone sales remind, it is a company whose main brand has stiff limitations.

According to Flurry, Inc., a mobile app analytics firm, Google (GOOG) managed to sell 80,000 Nexus Ones in its first month. Given the roughly $530 unlocked price direct, and assuming the same amount to Google for the subsidized version, that would translate into about $42 million over January.

Good, right? Well, not so much. Granted, the unit volume is an estimate and not reported numbers, but Flurry said that its equivalent measures of the Apple (AAPL) iPhone's first month in 2007 and of the Motorola (MOT) Droid's last November were 600,000 and 525,000 respectively. That doesn't even put Google into the also-ran category. And although people like Jared Newman at PCWorld reasonably say that it is too early to write off the phone as a failure, it is also true that unlike the original iPhone, the Droid came out in a noisy market and still managed to crank out the sales.

In context and perspective, this wasn't unthinkable. Google has yet to crack the billion dollar revenue mark on all of its non-advertising ventures combined, let alone turning any single one of them into at least a billion dollar business, which is actually just past mid-sized these days. And yet, when Google looks at a market new to it, you can hear the chattering of teeth and knees from so many other companies in high tech. I think it's because they make two faulty assumptions.

One assumption is that name recognition is the same as brand equity, and the other is that a company can translate a strong brand in one area into another one. Neither is true. In Google's case, it's well known and happens to have an immensely strong brand in search and online advertising. But as some marketing experts will say, a brand needs permission to enter a new market. Outside of its strengths, Google has yet to show that it can really translate the relationship with consumers into something that consumers or businesses are willing to pay for in enough volume.

Of course, that assumes that selling phones is actually the intent. My guess has been that the company's intent was to find a way to bypass carriers in developing relationships with consumers. But to walk around the carriers, Google must actually sell enough phones to make a dent in the traditional business model. It's failing on four fronts:

  • The unsubsidized price is far too high to get people to adopt the device in large numbers.
  • T-Mobile doesn't have enough draw to deliver customers at a high enough rate.
  • Google designed the phone so it wouldn't work with AT&T (T) because T-Mobile uses different frequencies for 3G service, so it's portability is only partial.
  • Most importantly, Google hasn't got a clue of how to deal with retail and consumer electronics sales, and so didn't have the marketing and advertising in place to make this a hit.
Ultimately, all four points come back to brand: how buyers perceive doing business with a company. Until Google's management comes to realize that it knows less than they think, forays into new areas will continue to be disappointing and leave the company as a wealthy but nevertheless one-trick pony.

Image via stock.xchng user eravariel, site standard license.