Google's "Free means no SLA" culture hits a nexus

Google is (in)famous for its (ahem) "user support", whether its for unsuspecting mom and pop merchants thrown off Adwords, or people struggling with its various Office products. To be fair, Google is no different from any other free service provider in that the mindset is something on the lines of "the only Service Level Agreement - SLA - you buy for Zero dollars is Zero SLA). Unfortunately, its release of the Nexus, where real users pay real money for a physical good, seems to be exposing this in spades.

The trouble started over the weekend when people started to find that Google wanted to take $350 from you and give you the same "we'll get back to you by email sometime" service they give their freetard customers. It seems to rather have surprised them that those same punters wot put up with shod...(Sorry, "best endeavours") free service levels have a totally different point of view when they hand over real money. Early complainants were laughed off as Apple fanboi's venting, but that only worked for so long (about 24 hours)

To be fair though, this a tough time for anyone - a 3-way new system launch (between Google, HTC and T-Mobile) is bound to have teething problems, but that's hardly unpredictable, nor is it unknown for disgruntled consumers to shout loudly when it comes to their valuable personal smart status symbols

But now Google are finding that whereas people will just click the Terms and Conditions of a free online service like sheep, when they are looking at 2 year contracts worth many hundreds of dollars they actually read them, and it would seem that when they don't like what they see the wolf comes out of the sheep's clothing. They read this:

You agree to pay Google an equipment subsidy recovery fee (the “Equipment Recovery Fee”) equal to the difference between the full price of the Nexus handheld device without service plan and the price you paid for the Nexus handheld device if you cancel your wireless plan prior to 120 days of continuous wireless service. For example, if the full price of the Nexus handheld device without service plan was $529 USD and the price you paid for the Nexus handheld device was $179 USD with a service plan, the Equipment Recovery Fee you pay will be $350 USD in the event you cancel within the first 120 days of carrier service. The Equipment Recovery Fee is equal to the line item in your confirmation email setting forth the discount on the full priced Nexus handheld device related to your carrier service plan activiation. You authorize Google to charge the Equipment Recovery Fee directly to your credit card, or other payment method used to purchase the Nexus handheld device, upon cancellation of your wireless plan. You will not be charged the Equipment Recovery Fee if you return your Nexus handheld device to Google within the 14 day Return Policy period as set forth below.

......

Please note that the Equipment Recovery Fee is imposed by Google and not your chosen carrier and is in addition to any early termination fees that may be charged by your chosen carrier in connection with termination of your wireless plan prior to fulfillment of your chosen carrier’s service agreement term.

And the punters can do the maths pretty fast too - in effect this means that if you buy a (subsidized) Nexus for $180 and then cancel the contract outside of the 30 day return window, you pay the ETF of $175 to T-Mobile, and then another ETF of $350 to Google. The total price ends up as $705, verse $529.99 original retail price.

Given that the $530 tag gets a phone that can be unlocked to boot, its little wonder that others have worked out where the arbitrage lies - Engadget suggests you:

....consider going the unlocked route with the Nexus One, in addition to having the AT&T (non-3G) and international GSM option.

Those of us who are European won't get nailed if we think its a turkey and return the thing within 14 days, as thanks to our consumer protection laws "residents of the EU will not be charged the $45 USD restocking/refurbishing fee when cancelling these Terms within the fourteen-day period and will be refunded the shipping fees paid for initial delivery of the Device."

No doubt we will see a Googleshift in position in the next few days, after the obligatory PR proxies lash out calling of all critics "Apple Fanbois"and so on

But I think there is a bigger issue here - Google has no people, and no "DNA", capable of handling physical, non-free goods over multiple channels and with high support requirements. I would predict 4 things:

- We will see a number of Googleslips on banana skins before this settles down
- In the short term a bigger handoff (and handout) to the Mobile service provider and potentially reduced emphasis on direct sales
- In the medium term a mass recruitment of FMCG specialists from sales to support.
- Retail shops, or at least franchises. Apple, Microsoft and the Mobile Telcos all have this, and they're there for a reason.

Dell sells the way Google does, but increasingly has to use proxy support, even though one would argue that its users are better at self supporting themselves than the average smartphone user - and still hardly escapes criticism (just Google "Dell Hell" - I await googling "Google Hell" with eager anticipation ) Dell ameliorates this by selling very cheap but fairly decently built computers (for the price....) in huge volumes and low margins. Amazon does the same with the Kindle, buts thats a much simpler thing - and Amazon has real experience of selling priced physical FMCG goods.