Google Inc is closing its four-month-old online cell phone store, abandoning an ambitious plan by the Web search leader to redefine wireless retailing.
Google said on Friday it will stop selling its Nexus One smartphone through its online Web store and will instead work with partners to sell the device through retail outlets.
“It’s clear that many customers like a hands-on experience before buying a phone,” Google Engineering vice-president Andy Rubin wrote on the company’s official blog announcing the change on Friday.
Rubin acknowledged that Google’s online mobile phone web store had not lived up to expectations, never growing beyond a “niche channel for early adopters.”
The move comes shortly after Sprint Nextel and Verizon both scrapped plans to support the Nexus One phone that Google sold online and represents a significant scaling back of Google’s ambitions in the wireless industry, said BGC Financial analyst Colin Gillis.
“They clearly have retreated from the model of revolutionising the method
in which we acquire our smartphones,” Ms Gillis said.
Still, analysts noted that Google’s challenges with its online phone store come as the search giant is making gains against Apple Inc and Research in Motion in the smartphone market with its Android software.
A dozen handset makers offer devices that feature Google’s Android smartphone operating system and more than 65,000 Android-based devices are shipped everyday, according to Google.
A report by NPD Group released earlier this week said that Android became the second most popular smartphone operating system in the United States during the first quarter, behind Research in Motion, and displacing Apple’s popular iPhone for the first time. Apple has disputed the study’s findings.
“There’s clearly an appetite, and there’s clearly traction in the Android device area,” said RBC Capital Markets analyst Ross Sandler.
For Google, which generated nearly $24 billion in revenue last year, primarily from online advertising, making sure that it has a strong presence in the fast-growing smartphone sector is critical.
“Google’s entire philosophy around mobile is they want to make sure that they’re the default search engine as users transition from PCs to mobile for Web browsing. That’s the overall strategy,” said Sandler.
But Google’s plans to carve out a larger role for itself in the broader wireless industry were less successful.
Google opened its Web store in January, offering the sleek Nexus One handset as the first of what it promised would be many more devices available for sale.
The Nexus One, which Google designed in close collaboration with HTC, was available for $179 with a two-year contract from Deutsche Telekom’s T-Mobile USA, or $529 without a service plan.
In an interview at the time, Google’s Rubin said that by selling the phone directly to consumers, Google would be able to cut out extra retailing costs and ultimately deliver phones with lower price tags.
“There’s a lot of people in the value chain who don’t need to be there,” said Rubin.