Bad News for Google: Nexus Phones Still Don’t Sell

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Phone makers typically don’t talk sales figures unless there’s a reason to brag, or in the case of Samsung, unless they’re forced to reveal their secrets in court.

Thanks to the case of Apple vs. Samsung, we now know the sad truth about Samsung’s Galaxy Nexus: After two quarters, the phone only captured 0.5% of the smartphone market at most, and brought in a mere $250 million in sales revenue, Bloomberg reports. Given that the Galaxy Nexus never cost less than $349 at unsubsidized rates, the total units sold is far less than a million, compared to 10 million of Samsung’s Galaxy S III and at least five million of the Galaxy Note.

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Weak Galaxy Nexus sales aren’t a huge problem for Samsung, which booked record profits last quarter and is the world’s top-selling phone maker. It’s a much bigger issue for Google.

“Nexus” refers to devices that offer a pure Android experience. While most phone makers customize Android with unique layouts and features, and load up the device with various apps and services (a.k.a. “bloatware”), on a Nexus device the experience that Google envisions for Android is exactly what you get.

Techies tend to like the Nexus concept, but it’s never been popular in the mainstream. Then again, Nexus devices never had a fair shot until late last year. Before that, only T-Mobile and Sprint would subsidize the phones, and their retail availability was limited. The Galaxy Nexus, however, was more like a true flagship phone, sold by Verizon Wireless for $300 with a two-year contract. It hit store shelves during the holiday 2011 shopping season with TV ad campaigns in tow. Despite that, it didn’t sell.

The poor performance confirms what I’ve long suspected about stock Android: Most people don’t know what it is and don’t really care. They’re more interested in other factors, like price, design, camera quality and software features. The primary advantage of a phone that isn’t larded up with gimmicks — that it’s more likely to get software updates in the future — isn’t obvious to the average shopper.

In the past, a poorly-performing Nexus wouldn’t have mattered. Google always insisted that Nexus phones were primarily aimed at app developers, and used as lead devices for demonstrating new Android software. Even if Nexus phones weren’t commercial hits, they still served their purpose.

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But now, that purpose has changed. Google sees its Nexus devices not just as tools for developers, but as a way to promote its own content and branding to consumers. Why else would the company sell its Nexus 7 tablet at practically zero profit, and get it onto the shelves of GameStop, Staples, Office Depot and elsewhere? It’s all about pushing that Google brand as a viable alternative to Apple’s iTunes and Amazon.

We saw more evidence of this earlier in the year, when Google started selling the Galaxy Nexus on its website. “We want to give you a place to purchase Nexus devices that work really well with your digital entertainment,” Andy Rubin, Google’s senior vice president of mobile and digital content, wrote in a blog post (emphasis mine). The branding push also explains why the Android Market was renamed to “Google Play” this year — an umbrella term that covers apps, movies, music and books.

When phone makers tweak Android for their own purposes, they dilute the Google brand. Sure, the Google Play Store is still available on most Android phones, but it shares space with apps like HTC Watch, or the Samsung-owned mSpot, or whatever media apps the wireless carriers decide to stuff onto their devices.

If Google wants its content ecosystem to grow, it needs to take back some control by getting people interested in Nexus phones. Instead of going for the high-end, perhaps Google should try to repeat its strategy with the Nexus 7 tablet, and offer a phone with killer price. If Google can find a carrier who will practically give the phone away with a two-year contract, it’ll be impossible to ignore. And If the stock Android experience is good enough — and with Android 4.1 Jelly Bean, it is — the average shopper may finally bite.

MORE: Is Google Readying a ‘Nexus’ Android Invasion?