MoneyWatch Tech

Google Takes the Troubled Nexus One Phone to AT&T (Yawn!)

By Erik Sherman

Updated on: March 16, 2010 / 7:21 PM EDT / MoneyWatch

When Google came out with the Nexus One, the sales experience fell flat. How flat? Think of a sumo wrestler doing a belly flop into a kid's wading pool. Mobile analytics company Flurry pegs the total at 135,000 units -- total. That's not even what the Apple (AAPL) iPad probably sold on its first day. That's only an estimate, but the even if under-counting a bit, the Nexus One has been a marketing disaster. Google finally made the device compatible with AT&T (T), offering at least a chance to reach a much bigger audience. The big questions is whether it matters. I suspect Google's own phone efforts will continue to make Palm (PALM) CEO Jon Rubinstein look like Steve Jobs by comparison.

Starting today, an additional version of the Nexus One is available from the Google web store that is compatible with AT&T's 3G network. This new model can be purchased as an unlocked device without a service plan. In addition to AT&T's 3G network, this device will also run on Rogers Wireless in Canada. And like the first version of the Nexus One, it can be used with most GSM operators globally.

It's a mistake to see Google's move as strategic. AT&T already carries Android-based smartphones, so it's not as though this greatly expands the potential customer base. The move is also enormously late. Why would anyone switch to the Nexus One, particularly when AT&T is not subsidizing the handset? Who's going to pay $529 for the device when it's not heads and shoulders above other available handsets--when you can get an Apple iPhone that runs on the same network for far less money ?

But this shouldn't be a surprise, as Google has been staggering throughout the entire Nexus One debacle:

Google got into competition with its own business partners.
Given a chance to try re-framing the relationship between handset vendors and mobile carriers, Google opted to keep the boat steady and do business as almost usual.
The early January Nexus One announcement was a dismal failure.
It became clear that the Nexus One was largely stuck with T-Mobile compatibility and didn't support AT&T customers. Any of the existing customers getting an upgrade to make up for the lack of flexibility?
Customer service problems were rampant and the termination fee, on top of T-Mobile's, was outrageous.

Frankly, Nexus One smells like a personal one-sided contest between Eric Schmidt and Steve Jobs -- and one where Schmidt wants success guaranteed on the backs of his customers. It may be that Google sells more copies of the Nexus One, but it probably won't be many compared to any of its competitors. Google can assume its natural superiority from now until Doomsday, but its management has a lot to learn before a buying public agrees.

Then again, it also might have a lot to learn about business basics, as the U.S. Patent and Trademark Office has rejected Google's application for a trademark on Nexus One. Seems that another company, Integra Telecom, has a lock on using Nexus for telecom services. Can you say, "Better pay them 'cause they're gonna sue you?"