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Is Google failing at phones?
It's a question many are asking as negative news surfaces, seemingly every day, about the search giant's fledgling cellphone business. The past two weeks have been full of reports of lackluster handset sales, customer complaints about Google's ( GOOG - news - people ) flagship phone, the Nexus One, and news that the company's feud with the Chinese government would delay the launch of several Motorola ( MOT - news - people ) and Samsung phones.
The lesson seemed clear: Google didn't understand the phone business and was making a mess by entering it.

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The real story, however, isn't quite that simple. The point of Google's mobile business is to promote its Web services. To achieve this, the company wants to overhaul the traditional wireless service model in which operators hold most of the power. Google's mobile business decisions, including developing its own mobile platform (Android), opening a phone-centric Web store and commissioning handsets from favored manufacturers, all support that goal. The plan does not call for Google to leave the wireless industry for any reason, including meager sales or bungled launches. Like many things Google does, its mobile strategy is part business, part ideology.
That matters because Google and its partners did botch parts of their early January Nexus One launch. Confused--or alienated--by Google's Web-only customer service, users griped that the phone didn't work properly and was priced unfairly. "It's been on-the-fly learning," notes Keith Nowak, a spokesman for HTC, which manufactured the phone. "We didn't know how it would work until we started getting calls." Google spokeswoman Carolyn Penner adds, "We were aware of the issues customers were having."
Google and HTC contend they have since resolved the problems. The companies, along with service provider T-Mobile USA, held an emergency meeting soon after the Nexus One launch and ended up retraining their customer service representatives. Logistics provider Bright point ( CELL - news - people ), which is handling shipping and inventory for Nexus One orders, says it talks to Google and HTC daily.