Google promised to change the way cell phones are sold with its direct-to-consumer approach. The only problem is, nothing has really changed -- unless you count the Nexus One sales estimates that Goldman Sachs reduced from 3.5 million down to 1 million.Google should have known better. Anyone remember the launch of the original iPhone? Apple allowed people to run into Apple and/or AT&T stores and walk out with a brand new iPhone -- sans activation. Users were instead told to go home and activate through iTunes. That was a big change for the industry. Before then, most phones bought consumers in the U.S. were picked out at a wireless retail shop and activated on-site. A year later, Apple and partner AT&T changed everything back to the way it used to be -- buy and activate on site.

Google planned to change all that -- but it didn't. The Nexus One went on sale in January. The only place it can be purchased is through Google. It can be purchased with or without a contract (from T-Mobile). Some were bullish in the idea, including Goldman Sachs, which said Google could sell 3.5 million Nexus Ones that way.

Instead, sales have been tepid at best. The launch was mired by complaints about pricing models, malfunctioning devices, and the lack of true support for end users. Taking all this into consideration, Goldman Sachs doesn't think Google is going to succeed. In a recent note, it said:

We previously estimated that Google might sell 3.5 mn Nexus One units in 2010. Initial data-points were disappointing, possibly due to limited marketing and customer service challenges. Flurry estimated (based on mobile traffic) that Google sold 20,000 in the first week, and 80,000 in the first month, both annualizing to 1.0 mn. We forecast that Google sells 1.0 mn Nexus One units in FY2010, benefiting from US carriers other than T-Mobile, and non-US carriers such as Vodafone, promoting the device too, but suffering from limited marketing activity. We assume that Google rolls out a second Nexus handset, markets it more aggressively, and makes it available offline, and therefore forecast that Google sells 2 mn handsets per year in 2011 and future years.

In other words, Goldman now believes that unless Google changes itself and the way it is attempting to launch this sales model, if it is to succeed. The launch of the Verizon Wireless-branded version of the Nexus One is imminent. Will things change enough by then to convince consumers to adopt this new model?

[Via ZDNet]