I love competition! There is no doubt that the introduction of the iPhone raised the high water mark for mobile user interface and forced RIM to bring the BlackBerry Storm to market quickly. RIM and Verizon perhaps launched more hastily than they ought to have, but nonetheless the end result was the spawning of the mobile app revolution.
When the software powerhouse Google announced yesterday they are selling the GSM neutral Nexus One Smartphone direct, my initial thought was “I hope they recognize that they just stepped on a landmine!” In my opinion, this is the boldest (no pun intended) move a software company can make. After all, Microsoft has failed repeatedly to successfully make this leap to hardware manufacturer. The nuances of running a hardware manufacturing business is drastically different than writing software and making support tweaks. Furthermore, as I learned when I worked for Digital Equipment Corporation: it doesn’t matter how amazing your product is, you still need to market and sell it.
The Microsoft strategy has been to back the truck up and throw huge quantities of cash to solve these problems. Well, I think we all see how well that has worked for them. In order to be successful, Google better be well prepared or the darlings of Sand Hill Road will fall flat on their faces!
The first hurdle for Google will be to convince Motorola, HTC and other (now) third party manufacturers that this won’t impact them. Yeah right. How will Google create a level playing field in this hotly competitive and congested market?
Secondly, by releasing Nexus One as a GSM unlocked Smartphone and selling direct, Google thumbs both nostrils at the carriers. When I look at business plans for REGARD Venture Solutions, one of the primary things I look for is “cost of sales.” Will the business require a huge sales force traveling around the country or world to evangelize the product?
As a mobile software vendor, I have been invited into countless enterprise carrier sales meetings to introduce REGARD Solutions. These carrier sales forces are strictly “coin operated.” It is nearly impossible to get mindshare of these teams unless they smell easy money. If they do, they will go sell the hell out of it! The carriers’ questions are always related to differentiation. Having a gadget that the other carrier doesn’t gives them a reason to call clients and sell.
On the retail side, Google will have to contend with storefront marketing, retail sales teams (also coin operated) and the “pants dropping” device discount game. As I learned when REGARD was in the device business, it is really hard to sell against “Free”.
By foregoing much of the sales and marketing muscle of the carriers, Google better have conspired with Count Dooku to build up a sales army of Clone Troopers that will get out there and push the product. Underestimating the convincing power of the carrier direct sales teams is among the mistakes Sierra Wireless made when the “GSM neutral” Voq Smartphone flopped in 2004.
For Nexus One to be successful, the go-to-market strategy will have to be one of differentiation and distribution through either well established carrier channels or they will have to revolutionize the distribution model as DELL did with a direct only sales model and killing everyone else on price. Presently, it looks as if they are doing neither.
As for how the release of Nexus One impacts BlackBerry and iPhone? Until Google addresses the issues above, there will be no impact except slight cannibalization of their third party Android sales. Apple and BlackBerry have provided plenty of “Kool Aid” to their faithful and Google will learn It takes a lot more than building a better mouse trap (not that it is). They still need to market and sell it!
Nonetheless, Nexus One looks amazing and, just in case everything I said above proves to be flat out wrong, I am ordering one today for my Android development team.