Nexus One: Not a Blockbuster, But Still a Big Deal

There's been lots of talk about Google's Nexus One falling short of expectations. Research firm Flurry indicated that the device's first week sales pale in comparison to those of the iPhone 3Gs, HTC MyTouch 3G, and Motorola Droid.

The Droid is perhaps the closest comparison in both time of release (November release) and in its overblown buildup as the latest "iPhone Killer." Along those lines, the Nexus One's 20,000-unit first week sales are eclipsed by the Droid's comparative 250,000.

But let's not forget the Droid's Verizon-backed marketing blitz. The Nexus One conversely came with Google's famous advertising-free approach (notwithstanding the "priceless" Google homepage plug). The message seemingly reached few beyond us geeks in the tech media.

Worse than the numbers is the chatter throughout the tech media and blogosphere about enraged customers. The issue is that Google's direct-to-consumer approach is leaving many users without customer support or ability to see before they buy.

These pains are legitimate, and the flak has been swift. But Google deserves some credit for what is overall a consumer-centric move. It has unbolted the hardware from the carrier -- something that's stifled innovation and competition in the U.S. mobile market for decades.

As background, Google is selling the phone directly to consumers who then choose to sign up with its partner T-Mobile (phone subsidized at $179), or take the phone with them to another GSM-compatible carrier such as AT&T (full price tag of $529).

Of course the financial incentives to go with T-Mobile, and practical reasons to avoid AT&T's inferior data network, make the choice a no-brainer. So the direct-to-consumer approach or carrier "unbolting" won't have a lot of direct practical impact on Nexus One buyers.

But that's not the point. The point is that this is a small but important step closer to the decidedly more consumer-friendly European mobile market. There, like the Nexus One, you buy your phone then choose a carrier.

Under this regime, the consumer has much more leverage, and carriers are forced to be more competitive with rates and service. Consumers are also less tied to a specific carrier when they encounter a particular mobile device that induces salivation.

By taking the first step towards this model, Google has opened Pandora's box for the next in line of beleaguered U.S. industries: the mobile carrier. We saw similar from the iPhone's welcoming of third party innovation (apps), but this could prove a bigger move in time.

The Nexus One current customer woes obviously aren't good. But the bigger story is the inflection point in the U.S. mobile market -- one that has much greater ramifications for the consumer in the long run.

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