May 14, 2010

1. Nexus One Marketing Planning May 14, 2010 Ankan Jain James Wade Peter You Satya Dash

2. Table of content: Upfront Analysis

3. Table of content: Marketing Plan

4. Part 1: upfront analysis

5. Product overview

6. Nexus One

7. Specification Powered by Android

8. Industry analysis

9. Mobile Phone & SmartPhone Market in U.S. Market for new Smartphone Millions of phones sold eMarketer – SmartPhone sales in North America 2008-2012

10. M-commerce Market in U.S. M-commerce market in $ billions eMarketer – US Mobile Advertising and E-Commerce Revenues

11. 3rd Party Apps Take Over Business & consumer mobile applications pending Worldwide, 2009 – 2010 (billions) • Since launch of iTunes App Store, 3rd party applications have skyrocketed in popularity • Creates additional revenue stream for app developers and OS developers • VoIP apps threaten to disrupt market structure by competing with carriers Source: eMarketer 2009 report

12. Top Five Mobile Content and Services Slide 12

13. Trend – Switch from Feature Phones to Smartphones • Since launch of iPhone in 2007, consumers are increasingly moving from feature phones to Smartphones • Shipments of Smartphones are projected to exceed feature phones in 2012 Slide 13

14. Smartphone Industry Trends Switch from feature phones to Smartphones Skyrocketing popularity of 3rd party apps Fierce competition at all levels of industry Shift from business to personal and mixed use

15. Trend – Shift from Business to Personal Use • Smartphones were originally used mostly for business applications such as constant e-mail access • Since launch of iPhone and iTunes App Store, biggest growth has been in phones for personal use • Many consumers use Smartphones for both business and personal use

16. Trend – Ferocious Competition and Innovation • Just since February 2010, handset and OS makers have announced the following new products: • Palm Pre Plus and Pixi Plus • Can create mini-hotspots to connect other WiFi devices to 3G • Microsoft Windows Phone 7 Series • Completely redeveloped OS from Microsoft • HTC Evo 4G • 4.3” screen • Wi-Max 4G service • 8 MP camera

17. Trends - Social Media Makes SmartPhone a Necessity

18. Communication Industry Market Structure Communication Wireless Wired Television Paging Cellular PCS - Personal Communication Fox, CNBC, CNN Wireless Phone VOIP Tablet PCs/ eReaders Internet Comcast, Time Warner iPhone, Droid, Palm, LG, Samsung, Google Vonage, Comcast, Skype, Cox iPad, Kindle, Nook Phone AT&T, MCI

19. Wireless Digital Convergence Technology is breaking down industry walls. The convergence is creating brand new opportunities.

20. Market Structure – Eco System Operating System Apple, RIM, Google, MS, Palm, Nokia Apple, RIM, HTC, Samsung, LG, Palm, Nokia, Motorola Handset Makers Carriers Verizon, AT&T, T-Mobile, Sprint Retailers Carrier Stores, Web sites, Best Buy, Wal-Mart One firm may be all 3 or any combination Consumers 3rd Party Accessory Makers 3rd Party App Developers

21. competitive analysis

22. Competition Leader Motorola Droid iPhone Nintendo DS Nokia Blackberry iPad Palm Sony camera phone Direct Indirect Kindle LG Garmin nuvi GPS phone Samsung Laptop connect cards Smart Phones Emerging Feature Phones Smart Devices GPS/Cameras Other Wireless Media Competition Impact on Business Strategy

23. Smart Phone Competitive Landscape Nokia Palm Droid Samsung Business Use Personal Use Blackberry iPhone LG

24. Market share of Smartphone players Note: ages 18+; among those who own a smartphone Source: Razorfish, "FEED: Digital Brand Experience Study," Nov10, 2009

25. Operating System Players Slide 25

26. Carriers

27. Smartest & Dumbest Competitive Marketing Tactics

28. Smartest – Apple iPhone Hype Cycle • Months of rumors and speculation. • Jan 2007 – Steve Jobs announces the iPhone. • The hype built up even more between Jan and Jun 2007. • Thousands of people waited anxiously for iPhone premiere. • Endless line on day of launch – Jun 27 2007.

29. Smartest – iPhone Network Externality • iPhone has a huge positive externality effect. • Apple advertises that only iPhone has 100,000+ apps. • More buy iPhone because of apps. • More developers develop apps only for iPhone. • And more people buy iPhone. • Apple marketing has expanded Smartphone market.

30. Smartest – Droid Does what iPhone doesn’t • Droid positioned itself directly against iPhone. • Advertised all its features that iPhone doesn’t support. • Motorola Droid

31. Dumbest – Rage? 802.1x Authentication? • Too technical for users. • Doesn’t explain benefits. • No call for action. • Not necessarily clear why only Palm can have these features.

32. Smartest – Apple Store Invites Trial Apple retail store. Come to shop and return to learn. • Apple in-store trial is a unique experience for customers. • Customer experience results in repeat customers. • Customers drop by just to hang out. • Genius bar for hands-on technical support. • High customer satisfaction results in very high brand loyalty. Got a technical question? Step up to the Genius Bar.

33. Dumbest – Retail Store Invites Confusion • General retail stores do a poor product display. • All phones are given equal importance. • Nobody answers “why this phone”?

34. Dumbest – Palm Rests on an Old Apple core • An indirect shot at iPhone, but doesn’t call out why Palm Pre is more attractive. • Target audience is not clear. • No call for action.

35. Dumbest – Nice colors, but why? • Just attractive backgrounds, but doesn’t explain phone features. • Why this phone? • Who is the target audience?

36. Dumbest – Subtle Approach • Droid promotions appeared on Google search results. • Bad placement as it doesn’t even say that Droid is a phone. • No targeted message.

37. Smart – Free Publicity • Blackberry built free publicity out of President Obama’s passion for Blackberry. • The messaging is clean and powerful.

38. Not-so-smart – Why Palm? • Doesn’t explain why you could organize your life only with Palm. • Doesn’t call out Palm’s features. • No targeted message.

39. Not-so-smart – Is it a phone advertisement? • Cingular, Windows Mobile and Phone have same visual importance. • Phone features are not highlighted anywhere. • The spokesperson doesn’t even use phone in the picture.

40. Not-so-smart – Can you even see it? • Nobody can notice the tiny Palm Pre logo at above 200mph speed.

41. Not-so-smart – Shoe or Blackberry ad?

42. What Worked & What Didn’t

43. What has worked for Nexus so far? • Google BRAND. • Partnership with T-Mobile. Those who prefer T-mobile carrier now have a better phone choice. • Effective online advertisements. http://www.youtube.com/watch?v=I6COwgigJ-g

44. What has not worked so well? • Is sold ONLY on Google website. • Carriers rejected such partnership. Verizon and Sprint didn’t want to offer Nexus phone. • No mainstream advertisement • Conflicts-of-interest with open source Android platform development. • Very low product recognition

45. Nexus One Sales Flop • Nexus One receives excellent reviews in most publications • Analysts report very low sales in comparison to iPhone and to another Android-based phone – Motorola Droid

46. Marketing Research Results

47. Mobile phones used today • Kinds of phone used today • 100% of people use a cell phone. • 30% of people use a land line • 19% of people use Skype phone • Kind of cell phone used • 94% of people use a cell phone with advanced features: text, camera, internet and video • 6% of people use a cell phone without advanced features.

48. Google features being used by People

49. Willingness to pay for Dream Phone

50. 78% of people would like to test drive a phone in the store before buying it. 64% of people would like to pay subsidized price for their phone instead of full price. 51% of people have never heard of Nexus One smart phone Insights from Market Research