In a March post, I used slow sales of the Nexus One as an example of a disconnect between actual consumer behavior and the arguments of “consumer groups” in Washington. I noted that these consumer groups advocate against subsidized handsets subject to early termination fees based on their belief that consumers would be better off paying full price for handsets without an early termination fee. And I noted that Google’s attempt to prove the viability of a market for full-price handsets sans termination fee through direct sales of its Nexus One wasn’t faring very well. Google has now conceded the point.
Google has announced that it will stop selling the Nexus One via its direct-to-consumer website. According to Andy Rubin, Google’s VP, Engineering, the web store has “remained a niche channel for early adopters, but it’s clear that many customers like a hands-on experience before buying a phone, and they also want a wide range of service plans to choose from.” The key concept in this quote is “choice” – something Washington’s “consumer groups” have tried to eliminate through calls for regulation ending consumer handset subsidies. When consumers are allowed to choose, they appear to choose the subsidy.