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Google has finally realized that the majority of people want to see the phone up front before they purchase it. Maybe the nexus one would have done a lot better if they didn't waste there time with online sales.
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I think the biggest problem wasn't not being able to see the phone in person (look at all the preorders for the Incredible, Droid X, Evo...), but after buying it, the customer service was all confused. Who do you go to with a problem with your Nexus One? HTC? Your carrier? Google? I think people like having a physical store to go to if they have a problem.