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Why Nexus One being profitable for Google is no surprise

Leena Rao, for TechCrunch:

“Additionally, Google revealed that Nexus One, Google’s recently launched Android phone, is a profitable business for the search giant. The fact that’s its already profitable is surprising, if you take into account this report from Flurry, which reported low Nexus One sales. In fact, there’s been a lot of talk today about how the Nexus One’s initial roll-out has been a flop.”

It’s very much NOT surprising that Google is turning a profit on the Nexus One business, given that the only cost directly against Nexus One for Google is the cost of building the pages that sell it.

It didn’t design or build the hardware – HTC did it, so no cost there.

It won’t have a charge for software – it’s all standard Android, which will be accounted for elsewhere on Google’s books.

It doesn’t hold stock of the product – it’s fulfilled by HTC, through Brightpoint.

Beyond word-of-mouth and whatever T-Mobile is doing, there’s almost no marketing costs.

To be honest, with those overheads I suspect Google would have turned on a few thousand sales, let alone 135,000.

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