May 17, 2010, 3:43 PM

Google plans to shutter its Nexus One e-commerce store

Google says it plans to halt sales of its Nexus One smartphone through its online store, less than six months after the store’s opening marked the search engine’s first entry into e-commerce.

Google Inc. says it plans to halt sales of its Nexus One smartphone through its online store, less than six months after the store’s opening marked the search engine’s first entry into e-commerce.

“While the global adoption of the Android platform has exceeded our expectations, the web store has not,” wrote Andy Rubin, Google engineering vice president, in a blog post. “It’s 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.”

Google launched its web store, Google.com/phone, to sell the Nexus One, which uses Google’s Android operating system, directly to consumers. At its launch, Google said the site aimed to make buying a mobile phone and service easier by enabling consumers to buy the phone separately from phone service. That’s unlike the standard practice in the U.S. where consumers typically buy a phone and service as a package from a mobile network operator. When consumers buy a phone with a long-term contract, mobile network operators typically offer the phone at a subsidized price. For example, Google sells the phone without service for $529, or $179 with a two-year contract from T-Mobile USA.

The dominant search engine says it plans to work with phone carriers to sell the device through carriers’ retail stores.

Once Google increases the availability of Nexus One in stores, it will stop direct sales of the phones and will use the Google.com/phone site to highlight the phone’s features. The site offers a 3-D tour of the phone, as well as animation to show off the phone’s magnification features and illustrate that the phone is as thick as a pencil and the same weight as 53 pennies.

As it closes its online store, Google intends to focus its energy on further developing the Android platform, says a Google spokesman. In doing so, Google will encourage other handset manufacturers to develop more Android-based smartphones.

Commenting on the closing of the online store, Pacific Crest Securities analyst Steve Weinstein says it shows Google couldn’t change the way Americans prefer to purchase mobile phones. “People are used to having their phones subsidized, they don’t want to pay full price,” he says.

However, Weinstein adds that Google’s closing of its online store coincides with Google’s Android platform gaining steam. The Android platform recently passed Apple Inc.’s iPhone OS to take the No. 2 position among smartphone operating systems, according to the NPD Group, a market research firm. Blackberry holds the top spot.

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