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Google has its own phones, must fix its retail strategy

Google unveiled new hardware from smartphones and smart speakers to wireless routers

Policy Pulse
Publish Date: Oct 5 2016 5:34PM | Updated Date: Oct 5 2016 5:34PM

Google has its own phones, must fix its retail strategy

Google unveiled new hardware from smartphones and smart speakers to wireless routers. It was a year-long odyssey that involved design, supply chain negotiations and the search for a manufacturing partner. 


Now the Alphabet Inc. unit must grapple with the equally daunting challenge of getting the gadgets to consumers. It has a history of retail strategies that either struggled or never got off the ground, according to people familiar with the company’s retail efforts. What’s more, it’s inexperienced dealing with returns and recycling. And unlike rival Apple Inc., the company lacks its own stores where it can showcase hardware as it pleases and instead relies on other companies’ in-store displays. 


This time, the stakes are higher because the latest gadgets are vehicles for Google’s digital assistant, a key product that is chasing Inc.’s Alexa and Apple’s Siri. 


"We view go-to-market as a clear hurdle to wide acceptance, which will require investments in brand, marketing and distribution to overcome," UBS analyst Eric Sheridan wrote in a note to investors. 


Google is selling the new Pixel phones at Verizon Communications Inc. and Best Buy Co. stores in the U.S., via its own online store, a temporary physical store in New York City and through its wireless service Project Fi. It’s working with a small number of other wireless carriers and retailers in countries including Germany and India. Google Home, the new speaker, is available at Best Buy, Wal-Mart Stores Inc. and Target Corp. stores, in addition to Google’s online store. 


Cutting distribution deals with a handful of carriers and retailers isn’t enough, according to Forrester Research analyst Thomas Husson. “Google will have to up its customer-service game and do many more distribution partnerships," he said. 


Many of Google’s past efforts at selling hardware have fizzled. When the company started its Nexus brand in 2010 it planned to market the phones online only, but sales never took off. About 200,000 of the first Nexus model sold, short of Google’s target of several million units, according to a person who worked on the device. 


Then there was Android Silver. Kicked off some time in 2014, the internal project was designed to sell high-end Android handsets with partners to compete with Apple. Google set up a retail lab for the effort, claiming an entire building near its Mountain View, California headquarters, according to former employees. But it never got off the ground. Nikesh Arora, Google’s sales chief at the time, drove the initiative. When he left in July 2014, Android Silver was shelved. One former Google executive called it a boondoggle