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Google and LG’s imminent Nexus 4 staggered Android fans by offering high-end smartphone tech for nearly half the price we’d expect. Is that because Google’s subbing LG a couple of hundred quid on each one it sells?
We may never know, but it certainly looks that way. Spanish retailer Phone House went public on the matter, claiming it’s not going to sell the Nexus 4 because LG is attaching an RRP of €599 to the phone, which is rather at odds with the €299 and €349 price the unlocked 8GB and 16GB models are selling for if bought direct from Google.
This price mismatch and the possibility of Google subsiding the phones it sells directly also helps explain why O2 is asking for a huge £36 a month in return for a mobile that supposedly only costs £239.
Which raises the question… why? Why would Google want to offer the Nexus 4 so cheaply? Android’s been doing extraordinary business, so why does it feel the need to subsidise sales of this year’s Nexus phone to such a degree? Is there something secret in it? Are there going to be mature dating and tooth whitening adverts all over its lock screen? [TNW]
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Some things I rather not question. Just enjoy it, we are getting it in pounds and “cheap” who cares about Euros
Some of us are currently working outside the UK, so do take an interest in prices in Euros as well as Pounds.
Have someone back home send it to you, and my comment about the Euro was more of a joke (hence the smiley face).
It’s not a problem to get hold of stuff. It’s more for a comparison. Is it cheaper to buy stuff over here in Euros or getting it in Pounds next time I’m in the UK?
(assume there’s some form of flippant smiley here)
I am not sure what country you are in, from experience I would say things are better priced in the UK when it comes to clothing and tech. Cigarettes and booze not so much.
Currently in Germany although it is a short hop to Holland, France and Belgium. Beer and cigarettes are definitely cheaper, as is food on the whole. Not really looked into clothing and tech prices yet but the general cost of living seems a lot lower here while the quality is higher.
Early days though and I’m going to miss the gigs and comedy that I used to have on my doorstep in the UK.
I am trying to picture a German stand up comedian
They do have them apparently although it’s going to be a long time before my German is good enough to appreciate one.
I dont care! I want one! If Google then splatter is with orribe ads I’ll trust CM10 to sort it out.
How is it unfair? Companies can include whatever RRP they want with anything, but they cannot force the retailer to sell it at that price. Even if Google are subsidising it, there is nothing preventing any other retailer doing the same.
I wonder if this is because the first time Google tried to sell a phone directly it didn’t work so well because everyone was so dependent on the Carriers and Contracts. By cutting the cost of selling it directly, the can see if it is a viable way of doing things, all the while giving the carriers the big middle finger
Probably also because Google have never been hardware manufactuers so can screw over their integrated competitors like Apple and RIM who are more dependent on hardware for profits as well as services and now have a major competitor offering a high-end device for a mid-range price.
I think Google are our new alien overlords and anyone buying a Nexus 4 will become their unwitting slave (I’m still buying one!).
As the % of Nexus devices to regular Android devices increase, the fragmentation issue will also decrease. This is because the Nexus devices will release Android OS updates promptly and easily to users. May be the cheap price for the N4 is to really push Nexus devices into the general populous so people realise the benefit of it over those purchased via the carrier.
This is a really good point – fragmentation is the worst thing about Android as a platform in my opinion so this could just be a very aggressive move to start addressing that.
Except the Nexus model is never a high volume one. Even at this price, its market share will be small. You might not think so reading this site, but Giz readers really aren’t representative of the buying public as a whole. The fact that Google aren’t offering an LTE version is a symptom of this relatively small volume.
I think Google are just trying to guide the direction of the OEMs by introducing a hardware yardstick at a competitive price.
As a side note, I took my Nexus 7 to a fireworks party last night, with around 50 guests. Everywhere I went, people asked me..
‘Is that an iPad Mini?
‘What’s a Nexus?’
‘Android?!?’
I think you’ve hit the nail on the head there.
I was in Comet yesterday and overheard a chap explaining to his wife what the Nexus 7 was, she of course wanted an iPad or something from Apple.
She could have equally wanted something from Samsung, I’m just saying Google’s Nexus brand isn’t as well coveted or well known outside of Giz circles.
Indeed, I suppose because there’s relatively little advertising from Google, which is ironic.
I’d also be interested to know if the LG sourced, Operator supplied phones are still unlocked, and still have vanilla Android, or if they’ll be locked with bloatware and infrequent updates.
Being a Nexus it needs to have Vanilla Android anyway, so I would presume it won’t have any LG skin on it
Yeah, but remember the Galaxy Nexus “not a real nexus” issues in America, where carriers sold phones with locked bootloaders, and additional bloatware, which also meant updates didn’t come directly from Google (if at all)
But the US network/carrier situation is slightly different from here – the UK networks don’t have the same power as the US ones because they all compete on an equal basis so all google would have to do is enforce a clause stating no bloatware and any network that refused would run the risk of their competitors accepting. Whilst in the US people are often tied in on family plans etc making it much harder for them to move carriers, plus they have no right to move their number to another network which doesn’t apply here ensuring the UK consumer is much more powerful.
Not so – in the US you do have a right to move your number to another carrier. I’ve done it.
You have the ability to move numbers between networks but you do not have the same right to move your number as in the UK where the network is legally obliged to provide you with a PAC to facilitate the network mobility of a customer’s number.
In the US carriers are only obliged to allow customer to keep their number according to the FCC’s Local Number Portability guidelines which means that customers can move numbers between networks in their local service area. If you move to another city, or even just to another lsa irrespective of how close that was to your previous one, there is not a legal obligation on the carrier to allow the customer to move their number to a different carrier.
Those were the LTE versions, because the hardware was specific to Verizon, it was managed by Verizon. That’s one of the reasons that Google have avoided LTE this time around.
I am not really going to question why Google are not selling it for more
more than happy with the price.
In comparison, Carphone Warehouse are selling it for £389 sim free in the UK still not as cheap as Google but better than what Phone House (CPW europe) have quoted.
What CPW do have of interest however is a rolling contract from 3 called “Unlimited”. £12.90 a month gets you 200 minutes, 5000 texts, and *unlimited data*.
The perfect companion to the Nexus 4 I’ll be getting from Google Play me thinks
Scratch that, it’s called “Ultimate Internet”.
I’ve been used to 500mb up until now so unlimited, even if it does have a FUP, will be welcome!
Ya that is a cracking deal and the fact that three don’t throttle speeds is icing on the cake (also half price for 1st month
)
Just been reading this, don’t know if you know about giffgaff? For £10 a month, they’ll give you 250 min, Unlimited texts, and 1 GB internet, and fro £12, they’ll give you all of that but Unlimited Internet. Perfect for when I get mine!
The service is really good where I live and work, so I’m fine with giffgaff.
What about Virgin with their 12 a month rolling contract? 1200 min, unlimited texts and a gig of internet.
Get a giffgaff sim from here (with free £5 credit
http://giffgaff.com/orders/affiliate/sanchit123
Ty!
Compelling! Perhaps I’ll go with Giff Gaff then – I’m on Tesco at the moment which uses Tesco’s network (I believe they’re referred to as MVNOs?). Thanks for the info
One thing I don’t like about O2′s network however is I’ve noticed they reduce the quality of the jpegs you download…I’ll have to have a think
Sorry for the late reply (I didn’t know I had one!), but I didn’t know about the JPEG quality!
Tesco is running on the O2 signal, so the image quality, if reduced right now, will be the same on gg, as they also run on O2.
Why is this news? Google would give them away for nothing if it could sufficiently monetise the data they’d send back to its servers. Apple, on the other hand, has to make money on the hardware hence its whopping margins.
Apple make plenty of money off iTunes and the App Store. They don’t release solid figures, but looking at the amounts they’ve paid out to developers, they must be coining it. However, that doesn’t mean that Apple feel any need to reduce their hardware prices, as long as people are willing to pay them.
So Apple make money from the hardware and the software. Ka-ching.
Nope.
Apple’s CFO has said several times in earnings calls that both the App Store and iTunes are essentially run at break-even. In revenue terms, iTunes contributes about 6% compared to the iPhone at around 45%.
Compare to Google for whom advertising revenue makes up about 93% of revenue.
The profits are still reckoned to be in the hundreds of millions, despite the small margins. Of course, Apple would rather allow the ecosystem to grow at its maximum rate, so I can see why they’re careful about how much money they draw. Meanwhile, the vibrant ecosystem allows them to make more money from hardware sales, licensed accessories, retail stores, support, crossover products (customers who buy multiple Apple devices), etc, etc.
Also, that 93% number sounds like Google’s take from advertising revenue across all of its operations, not just Android.
You’ve just made my point again – Apple doesn’t mind thin margins from iTunes and the Appstore since it sees them as enabling hardware sales (which is where it makes its profits).
Google is the reverse – it doesn’t care about making a profit on the hardware since it can montetise the information that an Android user feeds them. Google can sell the hardware at a loss AND make a profit as long as the ARPU from the user of each device is greater than the subsidy.
I actually agree with you there, but I would also argue that it’s not that cut & dry. One way or another, Apple continue to make significant money off their users after they’ve purchased their device. Their App Store and iTunes margins may be slim, but those aren’t their only sources of post-sale revenue.
Yes, Apple are more about high returns on relatively low volumes, whereas Google are more about getting devices into the hands of as many customers as possible so they can monetise their services. However, Apple’s position allows them to play both angles to some extent, and not just with services but also with accessories, support and retail.
Compare that with OEMs like HTC or Samsung who make almost all of their money from the initial sale.
What do you mean “possibility of Ghoul-gul subsiding” I think it’s pretty obvious. Huge price difference. I wonder what LG think?
It’s called a business plan, just like how the networks offer free phones, Google wants your searches, sounds like a bloody good deal to me, why is it unfair ?
It’s not. It’s an open market, and Google are using their unique position to its maximum advantage. If Apple feel the need to respond, they’re perfectly capable of doing so. That’s how it works.
The other OEMs (some of whom are in financial difficulty) are less capable of responding, but frankly the Nexus 4 isn’t going to sell in huge numbers anyway.
I’m unsure of what you’re disagreeing with, it’s an open market and selling them at a discount is part of Google’s business plan (obviously) Nothing unfair at all.
Quite right. When I say ‘it’s not’, I’m responding to ‘why is it unfair?’
.
It’s so nice to be
• Out of contract
• The Nexus 4 coming along
• Having the choice of buying the phone unlocked and un-butchered, THEN choosing a cheap contract to go with it
• Not having to fork out £500 for a Galaxy S3 or iPhone in order to future-proof my phone for the next 2 years while I’m tied into an expensive contract.
Well done Google.
No its unfair! lol.
This article is a bit like the Engadget one Linus Torvolds ripped into.
https://plus.google.com/u/1/+LinusTorvalds/posts/8KBkzumMEc1
I like you am in the same boat, I just switched to a SIM only contract and a new top of the range Nexus to replace my Galaxy Nexus for less than £300 sounds great.
Go for giffgaff for a cheap contract!
I’ve been an iOS user for 3 generations of iPhone. This offering has made me seriously consider giving Android a whirl.
In The Verge’s YouTube feature on the new Nexus range and 4.2, something was made of the “Nexus brand”. Personally, I see this aggressive pricing a way of increasing awareness of said “Nexus brand” which will ensure more customers in the future.
Lose a little now, gain a lot later.
Hmm. I think that by pricing something cheaply, you actually devalue the brand in the eyes of the consumer. It’s difficult to command a premium for your product after that.
Considering how little advertising I see for Nexus devices, I think that would have been a good place to start.
Nobody I’ve ever spoke to about a Nexus 7 would ever describe it as “cheap”. In no way does pricing have an impact on the perceived quality of a product once you’ve seen it in the flesh (or the spec sheet, for the more informed consumer). All people think is “blimey, what a bargain!” not “urgh, if only it was £200 more expensive – then it’d be worth my money…”
And if the N7 is anything to go by, expect a Google ad before long.
You’re right, pricing doesn’t affect the perception of the product. That’s not what I said.
It affects the perception of the brand. If you want to charge a premium for your product, you need to have perceived value behind your brand. Not only that, if your brand is associated with cut-price products it’s incredibly difficult to be associated with anything else. This is why car companies like Volkswagen sell their cars under four different brands (Audi, VW, Seat, Skoda). It’s why fashion labels sell last year’s range at a separate outlet store, rather than sell the discount products on the same shelves as their premium products.
Apple’s brand was recently valued at over $180bn, making it the most valuable brand in the world. The brand is by far the most valuable asset that the company owns. Without the brand, Apple would find it difficult to command a premium for their products.
I don’t think Google’s aim anymore is to sell premium products at premium prices like Apple, but if they sell at cost or a loss right now, a slight price bump in the future to put them back in black won’t seem unreasonable – moreover, the custom they would’ve gained with previous products will likely repeat into the future.
I think the Nexus 10 poses an important point as to how the Nexus brand is still a very premium one. The device retails at £389 for the 32GB model which is hardly cheap – the TF700T and Note 10.1 can be picked up at a similar price point. The screen is industry leading, and it rocks the first ever Cortex A15 processor in the tablet form factor. Yes, the price is on the cheaper side of the spectrum, but this is hardly a budget device, and therefore “Nexus” is hardly a budget brand.
Regarding Apple’s brand, I beg to differ. Maybe not so much with this generation’s iPhone, but certainly with every other product in the entire Apple lineup, the design is second-to-none. Not many products in the world come close to most of Apple’s, and not a single manufacturer has such a consistent portfolio of impeccable hardware design. Whilst I agree the nibbled fruit is definitely worth a lot, accrediting their success almost solemnly to this seems a little naive.
I wasn’t suggesting that Apple’s success lies solely with their brand. The brand is valuable for a reason. No one can build a brand without having first built a reputation. Brand value, public perception and products are all linked, to the extent that you can’t have one without the others. Apple have spent years cultivating their brand as a premium marque.
However, what brand value does allow you to do is to sell similar products to your competitors, yet command a higher price. It might also allow you to set up a shop next to your competitor and charge the same price for a similar product, but draw more custom.
And yes, I wouldn’t call Nexus a budget brand, but it’s not a premium brand either, and it’s one that is still in its infancy. I suppose they could charge a bit more for their products if the brand gains recognition, I’m just saying that they may never be able to draw the premiums that the likes of HTC, Samsung and Sony achieve, never mind Apple. At least, not in any meaningful volume. That might sound like an odd comment on this site where the Nexus brand is already well established, but Giz readers aren’t representative of the public at large.
This has been mentioned before in a comment… but this pricing will probably kill the market. Smaller companies, who can’t work in a loss, will die out, meaning less jobs for the world. Google have really made a huge name with this!
Tbh the only reason to buy this phone is if it is cheap.