The Nexus 6, the latest in Google’s own brand of smartphones, is far from being a top seller. After the company failed to make enough units to meet holiday demand, sales have been disappointing. What’s worse, Google may have missed its window. Interest in the product has mostly evaporated as Android fans gravitate toward newer offerings from Samsung Electronics and others.
But then along came Project Fi. Google’s experiment in becoming a wireless carrier, announced on April 22, could prove to be the savior the Nexus 6 needs. If Google hardware partner Motorola Mobility can make enough of them, and consumer interest in Fi is strong, the phone could double in sales within a year, according to Roger Entner, an analyst at Recon Analytics. Google didn’t respond to a request for comment.
Project Fi, a new low-cost mobile phone service, will require subscribers to use a Nexus 6 at first. Google says this is because it’s “the first smartphone that supports our network of networks. It works with the Project Fi SIM card, which supports multiple cellular networks, and a state-of-the-art cellular radio tuned to work across network types.” Project Fi automatically switches between Sprint’s and T-Mobile’s U.S. cell networks, as well as nearby Wi-Fi, to give customers the strongest signal wherever they are.
While the technology effectively unties users from dependence on a single carrier’s network, it also drains the phone’s battery as much as 20 percent faster, Entner says. Regardless, the fancy network technology under the hood hasn’t done much to sway people looking to buy the hottest new phones. Samsung’s Galaxy S6 and S6 Edge, which arrived at stores on April 10, have been a hit, and LG Electronics is expected to introduce its flagship G4 smartphone on April 28. Apple’s iPhone, of course, remains a success, further boosted by the recent availability of its companion product, the Apple Watch. “The Nexus is decidedly second-tier, if that,” Entner says. “It’s a good, solid device, but it’s not better than anybody else’s.”
Project Fi may change some people’s minds. Service plans start at $20 for unlimited texting and phone calls, plus $10 for each gigabyte of cellular data. Customers get credit for unused data-a proposition that some who are not on family plans may find appealing. While other providers, such as FreedomPop, have offered similar rates, Google’s clout could help it attract more subscribers. The service could get as many as a million users in its first year, Entner estimates.
For the Nexus to benefit, Google will have to make sure there are no more shortages of the device. During the company’s fourth-quarter earnings call, Chief Financial Officer Patrick Pichette said it was “unable to secure sufficient inventory to meet the demand that we had forecasted.” The shortages have since been resolved, but demand for the Nexus 6 fell below expectations after the popular Nexus 7 tablet had set the bar high, Google said during its first-quarter earnings call on April 23. (Google just stopped selling the Nexus 7, which came out in 2013.)
Google would see an advantage from creating a virtuous circle connecting its Nexus phone with Project Fi, but the company shouldn’t handcuff its wireless service to an unpopular product, says Roger Kay, an analyst at Endpoint Technologies Associates. “Fi won’t make it if it depends on Nexus alone,” he says. No matter how good the service is, people want to use gadgets they’re familiar with, particularly the iPhone faithful. Google may want to take a look at newer products from Apple, including the iPad Air 2, which features special SIM card technology that lets U.S. customers switch among AT&T, Sprint, and T-Mobile.
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