If you are a fan of Google and have been reading the Interwebs today, you know it has been a busy day. Loads of leaks and other details about the new Nexus 5X and Nexus 6P have been flowing like water and this is all the day before the actual Google event tomorrow in San Francisco. Some of the news has been confirmation of what we already pretty much know like the specs of the 5X and the 6P but some of it has been new tidbits. One of those new rumors is that Google plans to sell the new Nexus lineup online only through the Google Store. Some have read this as a risky move by Google given that they will ultimately be bypassing the carriers who did sell the Nexus 6 and previous devices as well as other retailers. In fact this decision to sell them online is the first time Google has done this since the original Nexus One back in 2007.
To me however, this is a smart move by Google. It gives them the cleanest path to the consumer and it follows the trend that the market is dictating, namely people want to buy devices and not necessarily be tied into a carrier contract. Yes they have to get it right and there are examples of how to get it wrong, including Google themselves, but this could be the way of the future for all manufactures.
Few Want Carrier Contracts
The fact is that many people simply do not want to be tied to a carrier contract with a new phone every two or three years. Not only is Google seeing this trend but the carriers themselves are seeing this trend as well. Verizon has stopped subsidizing phones and AT&T isn’t far behind. T-Mobile has too stopped the subsidizing and they are even more focused on BYOD (Bring Your Own Device) to their network. For the United States this is certainly a new trend but in other parts of the world, particularly Europe, this is nothing new. Between 2011 and this year I lived in the UK and when I arrived, I had to sort out mobile phones for me and my wife. While some High Street shops like Carphone Warehouse would do an installment payment plan on a new phone, subsides were few and far between. That was fine by us. It allowed us to buy phones, unlocked, and basically put them on any carrier we wanted to while we lived there. When we moved back, my wife kept her iPhone 5 and still uses it today, unlocked and on AT&T’s network. Yes I had to pay a few hundred dollars up front for it but it just made sense. It was my phone at that point.
Carriers in the US are catching on to this trend. As consumers have gotten younger, the Millennial generation simply doesn’t want to be tied down to anything: location, career and certainly a mobile phone carrier. They want flexibility indeed demand flexibility. Buying the phone is the best option to allow them to do as they please with their devices. But it isn’t just Millennials who want this flexibility. Generation X’ers want it as well as many Baby Boomers and even a few of the Greatest Generation (of which my 93 year old grandfather belongs and rocks his unlocked Samsung Galaxy Alpha). The fact is that the traditional mobile contract is a dying breed and carriers see it as does Apple in their recent price plan announcements around the new iPhones. Google clearly sees the trend too.
Online Only Protects Google From Carrier and Big Box Bias
When I was a heavy Windows Phone user, one of the challenges I saw for Microsoft (and still do) was the carrier or big box (think Best Buy) retail locations. Rarely did you find anyone in the store who could give you details about the few Windows Phones they had in the store. In fact most often they would steer you to a Samsung or HTC Android device. Why? Lots of reasons. One was the simple lack of sales that Windows Phone has overall and retails sales people are like all sales people: They will take the popular, often the least resistance path (I’m in sales so I can say this – hold your offended feelings). Samsung’s, HTC’s and other Android phones and Apple’s iPhones were simply easier to sell. People knew them but they didn’t necessarily know Windows Phone.
With Google and the Nexus line up, it is a similar story. In a carrier or Big Box retail location they are competing for both space on the floor and the mindset of the sales people. That’s a big ask, even for Google (just ask Microsoft per my previous statements) so by going online only in sales, they avoid this completely. They control the marketing and positioning of their devices and aren’t subject to the path of least resistance.
Secondly, many OEMs would provide sales incentives to sell their devices. That means that a superior device would often be steered away from because the sales person made more money selling another handset. While Google will continue to have to compete with carrier and Big Box retail outlets, they will do so on a more level playing field. They will control the margins and ultimate prices to the consumer, not the whims of the carriers or retailers based on which OEM is paying best that month.
Some have argued that by not having the Nexus 5X and Nexus 6P in retail stores that Google runs the risk of people not knowing about there devices. That’s true to an extent but not entirely true. Google is positioning these devices as premium and flagship devices. Very few of these devices ever make it to a carrier or big box retailer with the exception of the iPhone. In other words, they aren’t really giving up that much in the bigger picture. What Google could (and should do) is offer a 30 day return policy on their devices, no questions asked. If you get an 5X or 6P and don’t like it, simply return it. This will give people the option to try it out and if it isn’t for them, they know they can get their money back and go by another phone.
That Said, There Is Little Margin For Error
Google has to get this launch right if they want it to be successful. That means making sure they have plenty of inventory on hand when the devices start shipping. In all likelihood you will be able to order a Nexus 5X or 6P starting tomorrow but it will undoubtedly be a few weeks before you get it. This pre-order mechanism is tried and true and will give Google ample time to fill inventory needs of these devices. What they cannot afford and absolutely must avoid is a OnePlus-esque debacle that has been the OnePlus 2. That has hurt OnePlus, something I said in my keys to success that they couldn’t afford to do. They did, again like they did on the OnePlus One, and the hype around the device has decidedly tapered off for them. Ultimately that is going to impact the overall success of the OnePlus 2 and OnePlus as a company. Google may be bigger but they can’t afford a big misstep either.
Google also has to make sure their marketing messaging on these new Nexus’ is done clearly without over hyping. They need to point out the strengths of these devices that people care about: Battery life, latest security updates, latest Operating System and tons of apps. Google has to overcome the perception (real or otherwise) that they are not as secure as an iPhone. They need to face that head-on and point out that because these come with the purest from of Android Marshmallow, they are the most up to date and secure Android phones from any manufacture. They also need to focus their message on having two devices for whatever you need in a phone.
Ultimately the move to sell the new Nexus 5X and 6P online will prove to be a win for Google. It will give them control of their destiny on their devices and allow them to market them on the strengths of the devices and Android Marshmallow, not what the carriers or retails want to message. It will also meet people where they want to be met: With a phone that isn’t tied up to a mobile contract. If Google gets it right, they will be a far better company for it.