Posted by Peter Farago on Wed, Jan 13, 2010
Flurry Estimates 20,000 First Week Nexus One Sales:
Not an Apples to "Apple" Comparison
The Google Nexus One launch has become the most controversial and confusing Android handset launch to date. With publicity "leaks" over the holiday season, the Nexus One handset received unprecedented buzz. This same hype helped create the expectation of a revolutionary Android handset and its potential to be an iPhone killer. To gauge the success of Google's first handset launch, Flurry leveraged its analytics reach to estimate launch week sales of the Nexus One.
Flurry monitors usage of more than 10,000 developers' applications on iPhone and Android platforms. In total, Flurry tracks applications on approximately four out of every five iPhone and Android handsets in the market, generating over 25 million end user sessions per day. To estimate first week sales totals for the Nexus One, myTouch 3G, Droid and iPhone 3GS, Flurry detected new handsets within its system, and then made adjustments to account for varying levels of Flurry application penetration by handset. Flurry additionally crosschecked its estimates against Apple actual sales, released for iPhone 3GS, which totaled more than one million units over the three days, June 19 - 21, 2009. Flurry first week sales estimates can be found in the table below.
While Flurry estimates that Nexus One was outsold by Droid by more than 12 times, myTouch 3G by 3 times and iPhone 3GS by a staggering 80 times, it's worth noting there are significant differences in the marketing, distribution and perception of the device as revolutionary vs. evolutionary. In short, key business decisions and other factors related to the Nexus One launch make an "apples-to-apples" comparison difficult.
As a product, the Nexus One boasts the most advanced Android OS to date as well as unique features, such as Google Voice and Google Maps. However, potentially due to the heightened "promise" created by early buzz, the handset has ultimately fallen short on sales expectations. Without the "wow factor" now expected with each new challenger to the iPhone, especially the first smartphone with Google's own branding, demand generation has been modest.
Next there is distribution, pricing and marketing to consider. For its release, Google executed an online "soft launch" of the Nexus One, a very different go-to-market strategy compared to Verizon's launch of Droid, on which it spent a record-breaking $100 million on marketing, including aggressive TV advertising spends. Instead, Google chose to market and sell the device to consumers directly through its own website. While this distribution strategy is among the most innovative facets of the Nexus One launch, and a threat to carrier control of the consumer relationship, a series of customer service and other mistakes reveal Google's lack of retail experience. Further, Google chose to launch its Nexus One after the holiday season. While selecting this launch time may have been designed to avoid competing unnecessarily with its carrier and OEM partners over the all-important holiday season, this also adversely affected sales.
Additionally, T-Mobile, Google's carrier partner for Nexus One, did not provide the same carrier co-marketing support as it did for the myTouch 3G launch. Cannibalization may also be playing a role as the Nexus One competes against the myTouch 3G for any new T-Mobile customer. In effect, sales are now split between the two handsets. And while Google, in an effort to avoid channel conflict with T-Mobile, appears to have set the direct-to-consumer price for the handset at over $500 dollars, the high price point combined with the fact that the handset is only considered an "evolutionary" improvement over previous Android devices, indicates that Google did not take the steps to maximize first week sales. This is especially evident when one considers that among the most expensive costs associated with the launch - marketing - has not been incurred, and could have been applied to lowering the direct-to-consumer price point.
With each consecutive Android launch, consumers are enjoying more choices in the market. The flipside of this, however, is that it will take increasing innovation and decreasing price points to attract new smartphone consumers. Further, for Android to continue to chip away at Apple's third-party app developer support - key to delivering consumers more value - it needs to aggressively grow the Android device installed base. Only then will application developers more fully support Android.
Posted by Peter Farago on Mon, Nov 16, 2009
There is a lot riding on the Motorola Droid. Verizon is looking for an answer to the iPhone, which has driven enviable data ARPU growth for AT&T. According to Rita Chang of Ad Age, the Droid is supported by a $100 million integrated marketing campaign, the largest in Verizon history, running through the end of 2009. Google's long-term bet on mobile, underscored by its recent $750 million offer to purchase Admob, demands that the Android OS propagate. Meanwhile, HTC enjoys an early mover advantage with its G1 and 1.5 generation of Android handsets. Finally, several more leading OEM's have pledged to support Android, with as many as 100 handsets scheduled to ship in 2010. In short, the once dominant, now reinvented Motorola has little room for error.
Through its analytics service, Flurry monitors usage of over 10,000 developers' applications on iPhone and Android. In total, Flurry tracks applications on approximately two out of every three unique iPhone and Android handsets in the market, including over 15,000 million user sessions per day. To estimate first week sales totals for the myTouch 3G, Droid and iPhone 3GS, Flurry detected new handsets within its system, and then made adjustments to account for varying levels of Flurry application penetration by handset. Flurry additionally cross-checked its estimates against Apple actual sales, released for the iPhone 3GS, which totaled one million units sold over the three days of sales, Jun 19 - 21. Flurry first week sales estimates can be found in the table below.
While Flurry estimates Apple sold approximately 1.6 million 3GS units over its first week of sales, it is important to note that Apple simultaneously launched its device across eight countries (U.S., Canada and six European countries), while the Droid launched only in the U.S. Additionally, the iPhone commanded a strong installed base of over 25 million at the time the 3GS launched. Of those, over 6 million were first generation iPhone users who were expected to upgrade to the 3GS. Taken in this context, Droid sales of 250,000 units during its first week from a standing start and in just one country, is a strong result for Motorola and Verizon. Also, by Flurry's measurement Android does have an edge over iPhone app usage, with the average Android session length at four minutes vs. two minutes for iPhone apps.
With its first week showing, the Droid is the fastest-selling Android phone to date. Compared to the myTouch 3G on T-Mobile, Droid outsold it by more than four times. Of course, Verizon has nearly 90 million subscribers to T-Mobile's 34 million and Verizon has shown a willingness to outspend previous carriers with its $100 million campaign. With Motorola forecasting its own Droid sales at one million through the end of the year, that equates to a cost per acquisition of $100 per handset sold. Verizon's aggressive campaign coupled with its 3G network advantage in key, populous regions of the country like the Northeast positions the Droid as a legitimate challenger to the iPhone.
While iPhone continues to dominate the Smartphone market overall, each subsequent Android handset launch increases competition for Apple. Furthermore, Flurry has monitored a sharp increase in new Android project starts by application developers within its system, a 94% jump in October compared to September. The launch of Droid signals the beginning of a viable platform alternative to the iPhone as Android builds critical mass. As major companies continue to vie for a piece of the exploding Smartphone market, the consumer has never had more choice and innovation in the mobile industry. With Droid, Motorola has raised the bar for Android handsets, contributing to an ever-growing base of Android handsets upon which applications developers can build a business.