Vodafone wins: Google climbs down on selling phones

Search giant Google has reversed its US policy of selling its Nexus One handset directly to customers when it comes to the phone's European launch. The Nexus One will be sold through the retail stores of mobile operators, including those of Vodafone in the UK and France's SFR, rather than Google's own online store.

The news is significant because it represents a rare victory for mobile operators who face being marginalised by the likes of Google, Apple and Microsoft in controlling the relationship with users. Here is an instance where the large retail presence of mobile operators offers a means for them to fight back.

The Nexus One has sold disappointingly in the US compared with rivals, and Google clearly hopes working with operators will deliver a more encouraging performance in Europe for its flagship handset. Rival handsets such as Motorola's Droid, which also uses the Android operating system, have been significantly strong sellers.

Vodafone, which has an exclusive deal for the European launch of the Nexus One, will launch the handset in the UK this Friday, followed by Germany, Italy, the Netherlands and Spain in May. SFR, which Vodafone is a shareholder, also will launch the handset in May.

Google's direct sales model in the US involves mobile operators providing only an underlying network connection to customers and severs operators' relationship with their users. Vodafone has been tough in negotiations with newcomers to the mobile markets. Supposedly it shied away from an exclusive deal to distribute Apple's iPhone in the UK because it was wary of the terms. O2 grabbed the iPhone instead.

For more on this story:
Financial Times

Related stories:
Google: Nexus One raking in a profit
Nexus One bolsters Google's advertising ambitions
Vodafone achieve early hit with iPhone, Nexus One bombs
Sales forecast slashed for Google's Nexus One - 70% down