Patrick Pichette, Google’s CFO, on an earnings call about Q1 2015 mentioned that Nexus sales have dipped since Q4 2014. Pichette revealed that “other revenue streams”, which includes money made from the Play Store and Google Store, was up 23% to 1.8 billion. The rise is attributed in revenue from the Play Store increasing but revenue was down 3% compared to last quarter. Pichette then mentioned that the rise in Play Store revenue had been offset by the decline in Nexus devices. The year over year decline in Nexus is in part due to recent devices, the Nexus 6 and Nexus 9, not being as popular as last year’s Nexus 7.
While the news that Google has seen a decline in interest in Nexus devices isn’t surprising, it is surprising that they were so up front about it during the earnings call. I’m left to wonder what they really expected. For the past few years Google has released their Nexus reference phones for between $300 and $400 depending on year and model only to follow up with a phone many people think is too big and for the low low price of $649 for the base model.
Let’s be clear: The Nexus 6 is a very good smart phone. I’ve owned one myself and the speed of the phone is pretty much unmatched and the ergonomics were pretty good for such a big phone. But Google isn’t Samsung or LG. They’re not a consumer electronics company. They don’t advertise like the big boys and they rely on OEMs to build them devices and then they put stock android on those devices. This causes several problems. First off, a lot of times you’re not going to get the OEM’s best parts as they’re going to be using them in their own flagships. Secondly, you’re at the mercy of the OEM to use their current form factor. The Nexus 5 is based off the LG G2 and the Nexus 6 is based on the Moto X 2014 yet those Nexus devices are lacking a lot of the software features that made the G2 and Moto X popular to consumers.
The biggest issue is here price. I do understand that the Nexus 6 stands up hardware wise to other current flagships but when you set a standard for pricing your phones at or near cost then raise that price significantly, there’s going to backlash. There will be some who say “You can’t expect that to last forever” but I think there’s a case to made that Google made a huge mistake with this. The biggest market for Nexus devices are android enthusiasts.
Google, get the phone into the hands of your biggest fans for as cheaply as possible. There are several reasons for this but I’ll highlight just two here. First off, these are your evangelists. If you’ve ever asked an Android fanboy about their Nexus device, you know how they worship at the church of duARTe. They spread the word better than anyone else about the advantages of Android. Many people still think Android is slow, ugly and filled with viruses. Nexus owners are generally free advertising. Secondly, these are the people who make the tweaks that push innovation. Apple stealing Android features for iOS and Google stealing iOS features for Android is well documented but many apps that have been created by third parties, like Siri, have been included into core OSes. These developers need reference devices on the latest version of the operating system to do their work.
Hopefully Google come to their senses and release the next Nexus at a close to cost price like the Nexus 4 and 5. There had been rumors of Google killing the Nexus program in favor of Android Silver in the past. Hopefully this isn’t the excuse they needed to push that idea forward.