As I wrote following the launch of Google's Nexus One phone and its online retail store, Google will be an influential retailer, but isn't today because what they offer isn't different from what's available from carriers or merchants like Best Buy or Amazon — it's only differentiated by its exclusive on a hot device.
Most people who buy phones today want to feel the heft of the device, play with its UI, get a sense of the experience of using it since they're making a long term commitment to it. As a result, most phones are sold at operators' retail outlets or at physical retailers. During the launch event I asked Google's Andy Rubin, the driving force behind Android, whether they felt that they may in the future need to expand to include physical retail (such as a carrier partner's stores). He said no, that consumers are increasingly going to buy their phones online just like they buy digital cameras. He is likely correct, but (again, as I wrote) that time is well into the future.
What wasn't explicit in my question, and which the initial flurry of Nexus One sales experiences has exposed, is the stark reality that being in the retail phone business involves a lot more than the sale itself. Today the news is full of stories of Nexus One owners frustrated at their inability to get access to a human being to help resolve problems or answer questions related to their new phone. (It hasn't helped that the device itself appears to have some problems accessing T-Mobile's 3G network, and that buyers may not have checked the presence of 3G coverage where they live and/or work.)
What lessons should we draw from this?
- A Google customer is very different from that of a physical retailer. Google has hundreds of millions of what it calls customers, consumers who rely on Google for search, communications, mapping, and a wealth of other useful and impressive services pumped out by their talented engineers. But few of these customers pay Google anything beyond their attention, some personal information and a boatload of behavioral data. As a result their expectations for customer service are relatively low and Google's default strategy of providing support via automation is generally deemed adequate (though certainly not by all). The experience of Google customers seeking assistance is diametrically opposite that of, for example, a dissatisfied Nordstrom customer seeking redress.
- Mobile phones are still markedly more complex than other consumer electronics products. While I get Andy's point, the experience of buying a phone differs radically from that of buying a digital camera or other CE product because there are more phone features that are "above the fold" for most average phone buyers than on a camera, the software matters much more since consumers interact with their phones many times every day…and we haven't even touched on the difficulty in comparing mobile service plans.
- Mobile retailers are about a lot more than sales. I once asked a senior person responsible for retail at one of the major carriers "what percentage of customer visits are service-related rather than sales-related?" Answer: more than 90%. A key element of Sprint's effort to improve its customer satisfaction is its "Ready Now" program, which ensures that a customer who gets a new phone walks out of the store assured that all the features of the phone are properly configured and with hands-on experience in how to do everything that matters to them. The result is a significant reduction in customer care calls and returns during the critical first month of service with the new device. And does anyone remember the difficulties early iPhone customers had activating their device? Apple stores were cramped not just with new buyers but with people seeking help. Apple stores…you know, the ones equipped with geniuses.
I expect Google will weather this storm without too much damage. They're wicked smart, and their online resources will anticipate and address many more of their customers' challenges going forward, so that the Nexus One's core audience of skilled and self-sufficient online users will find their path smoothing out quickly over time. And consumers tend to be more forgiving of a device, which may go through hiccups before working well, than of a service provider and their annoying monthly bills.
But I think Andy's vision for mobile retailing will take a lot longer to obtain than he would like.