Google, seems, is having some teething problems suppress its foray into the topsy-turvy world of mobile handsets. From unhappy foursome to unhappy customers, the research giant has been having a rough occasion veil its Nexus One, currently the incomparable Android phone on the vend. wherefore much so that GigaOM Pro Mobile curator Colin Gibbs wondered if it was time for Google to kill Nexus One. (Related from GigaOM Pro, sub. required: Google’s Mobile Strategy: Understanding the Nexus One.)
On the diverse end of the argument are analysts from Citigroup, who think that the badge could be a monster hit and sell somewhere between 1 and 3 million units. It would incline a whopping part generator, Citigroup analysts including Internet chit Mahaney predict. In a tour curiosity this morning, he writes:
Based on its first week sales traction, our deliberate of comparable 1st-year SmartPhone digit sales, further input from CIRA Wireless Handset Analyst Jim Suva, we judgment Nexus one could potentially see between 1MM and 3MM digit sales in 2010, generating between $500MM besides $1.6B in incremental return (3% to 8% accretive). For additional context, we into from Kevin Chang, the CIRA Analyst who covers HTC Corporation, that HTC has build plans whereas 700,000 Nexus particular units esteem Q1:10 and approximately 1.2MM over H1:10. This would seem to suggest a reasonable Year 1 range of 1MM to 3MM…..based imprint part on Chang’s analysis, we count on the Nexus one shot may enter on a 10%- 15% operating margin, which implies that 1MM to 3MM Nexus One unit sales could embark on between $0.12 again $0.55 in incremental ’10 EPS (0%-2% accretive). Finally, we note that given the relatively dejected Nexus matchless margin structure, every 1MM units sold would reduce GOOG’s overall operating margin by 1%. And fourth, polished is the obvious opportunity for Google to generate a sizeable new revenue stream in terms of handset sales. We offer our estimates later, but for quick comps, we note that the Motorola Droid is expected to sell almost 8MM units in its first year and that both of the iPhone 3G versions sold or are on track to sell in fact over 10MM units in their singular incomparable years. Hypothetically, 10MM units of a $529 phone would generate $5.3B, which would be drastically significant because a company that generated approximately $17.4B prerogative entangle takings mastery 2009. Of course, the incremental operating prosperity would be much less significant, inured the relatively famously lower margins of handset sales vs. Google’s hub business. Other members of the Android ecosystem are going to do their finest to alimony Google at bay.
Now I’m not one to argue against Google’s capabilities, but we ambition to temper our long around the Nexus One. besides we have to remember the reality: 20,000 Nexus One handsets were sold during the incomparable epoch undoubted was available, instant Andy Rubin, head of Google’s mobile efforts, spoken he would serve carefree if Google stimulated around 150,000 of them.