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Google quietly announced that it will discontinue the direct sale of its Nexus One phone.

This week we received our last shipment of Nexus One phones. Once we sell these devices, the Nexus One will no longer be available online from Google. Customer support will still be available for current Nexus One customers. And Nexus One will continue to be sold by partners including Vodafone in Europe, KT in Korea, and possibly others based on local market conditions.

To ensure our developers have access to a phone with the latest Android OS, Google will be offering the Nexus One through a partner for sale to registered developers. Visit the Android Market Publisher site and log into your developer account to purchase a Nexus One.

This officially marks the end of the N1 experiment.  There are many opinions why this experiment failed. Google has certainly learned a lot about the complexity of the US wireless market and retail operations in general. The N1 offered a glimpse at carrier independence, with unrestricted software access and real-time Android updates. The 3G reception problems and the resulting finger-pointing between HTC, T-Mobile and Google highlighted the inherent problems with this direct sales model.

I believe, that the US wireless market with its carrier specific 3G data frequencies and incompatible wireless network technologies is a key reason for the failure of the N1, and Google’s direct sales model. Why buy an expensive phone without contract subsidy, if you can’t switch wireless providers because the phone wont work on another carriers network?

Google is acknowledging the importance of its Android-App-Eco-System by awarding free phones to selected app developers.

“Due to your contribution to the success of Android Market, we would like to present you with a brand new Android device as part of our developer device seeding program. You are receiving this message because you’re one of the top developers in Android Market with one or more of your applications having a 3.5 star or higher rating and more than 5,000 unique downloads.”

For the US market Google will randomly award either a Droid or Nexus One, while in Europe and other GSM only markets developers will receive a Nexus One.

Why is Google doing this? As it turns out many app developers still don’t have access to the latest devices running Android 2.x and it’s in Google’s best interest to have a flourishing app market with as many applications that take advantage of the latest features that Android 2.x has to offer.

After weeks of frustration in waiting and much heated discussion voiced in more than 1,500 posts to Google’s support forums, there is now a glimmer of hope that a fix to the “Spotty 3G” issue is in the works.

As posted previously here, the Nexus One is having some trouble holding onto a steady 3G connection under certain conditions.  Interestingly, similar problems occurred with the first iPhone 3G and were later addressed with a software fix. Following Apple’s playbook, Google has been mum on the issue until now.

Google finally posted the following statement to the forum today:

Hi Folks,

I wanted to post an update to the Nexus One Help Forum to let you know what we’ve been working on to help address the 3G issues some of you have been facing. I also wanted to thank you for being patient as we work to investigate the problem, an effort which has included our hardware partners.

The data from that investigation tells us that the majority of reported cases appear to be the result of being in low 3G coverage areas.  However, our engineers have also uncovered specific cases for which a software fix should improve 3G coverage for some users.  We are testing this fix now, initial results are positive, and if everything progresses as planned, we will provide an over-the-air software update to your phone in the next week or so.

Thanks again for your patience and for your feedback, and we will continue to keep you informed.

Thanks,

Ravi

I’m glad there’s finally an update on this. I’m really enjoying my Nexus One overall, but having weak or no 3G access takes a lot of fun out using it or showing off its great features.

Stay tuned for an actual date on the OTA update.

As previously rumored, January 5 is an important date for Android and the Google Phone.  The company has scheduled a press conference for next Tuesday.

With the launch of the first Android-powered device just over a year ago, we’ve seen how a powerful, open platform can spur mobile product innovation. And this is just the beginning of what’s possible.

TmoNews reports that T-Mobile “officially” confirms the Google phone on its intranet website.

Google with support from T-Mobile, is scheduled to launch a new Android device in early January.  The Google Android phone will be sold solely by Google via the web. Support for this device including troubleshooting and exchanges will be managed by Google and HTC. T-Mobile will offer service support, including billing, coverage, features and rate plans.

So it looks semi-official: Google will be selling and servicing its own phone.