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Google's Nexus 4 could trigger a price war: are smaller Android makers doomed?

Posted: , by Daniel P.

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Google's Nexus 4 could trigger a price war: are smaller Android makers doomed?
What has a 4.7" True HD display and powerful quad-core processor, yet costs $350 for the 16 GB version? Why, the LG Nexus 4, of course. 

The launch of such a powerhouse at such a low price point is throwing a wrench in the competitors' pricing strategies without a doubt, say industry sources. The only ones who can compete to such an aggressive pricing are the likes of Xiaomi, whose quad-core handset with HD screen costs the equivalent of $320, but is only available in China.

The Nexus 4 has high-end specs for a low-midrange price, and you get the latest Android edition faster than anybody else to boot, not to mention the flurry of ROM modding and feature tweaking that will keep your handset futureproof for more than the usual semianual upgrade cycle in green robot land. 

LG has skimped on some aspects to achieve that price point, mainly in terms of LTE connectivity and internal storage. LG and Google have also decided to avoid putting in a microSD card slot, which Matias Duarte said is confusing for consumers, but the real culprits are likely the up to $15 apiece licensing fees that have to be doled out to Microsoft for the exFAT file system, and the push to rely on Google's cloud services, streaming paid media from the Play Store - again a way to recoup the phone's low profit margin, if any.

Yet, the Nexus 4 is still the most compelling Android handset for that price. This is why the new Nexus strategy from Google might trigger an avalanche of price cuts from HTC, Sony, Huawei, ZTE and even Motorola, comment the sources, as the current $600 and up SIM-free mantra for high-end devices has been busted pretty unpleasantly by Google. 

Of course, the search giant banks on expanding its Android platform and mobile search revenue, so such price cuts will only go in its favor, but would reflect on the margins of smaller Android manufacturers, where the situation is not rosy to begin with. We might soon see upper-midrange or even flagships starting at the $400 point without a contract, depending on the storage version, and that is certainly good news for us consumers, and pretty bad news for most Android phone makers. 

Suddenly Nokia's decision to go with Microsoft doesn't look that bad, as it can still offer something unique with phones like the Lumia 920, and charge around $600 contract-free, without worrying about licensing fees that add up to make Android not-so-free. 

We'll see if such price cuts materialize for the holiday shopping season, but if they don't, most Android mid-rangers, and even some high-ends seem doomed after the launch of the Nexus 4, based on its availability. Is there anything else you'd choose before the joint LG-Google phone at this price point?

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posted on 31 Oct 2012, 06:12 19

1. snotyak (Posts: 27; Member since: 05 Jun 2012)


Galaxy Nexus was and is a good phone. I don't think it negatively impacted other manufacturers.

posted on 31 Oct 2012, 06:17 19

3. bloodline (Posts: 686; Member since: 01 Dec 2011)


Galaxy nexus was very underrated.

posted on 31 Oct 2012, 06:38 13

9. MeoCao (unregistered)


Nobody dares to enter price war against Google as Google just does not need the profit from Nexus.

But at the same time Google does not have any interest in a price war as they still have Motorola to care about, and the Nexus partners as well.

I think the low prices of Nexuses have several purposes:
1. Attract people to Google Play
2. To show Google's power and demand respect from other parties like Verizon or Apple and even SS.

So once Google achieve their objectives I guess we may see higher prices for next Nexuses.

And now I'll try to grab a Nexus 4 while it lasts.

posted on 31 Oct 2012, 08:33 1

25. muck1 (Posts: 9; Member since: 02 Mar 2012)


Very i told ppl if they use a nexus they wouldnt go back

posted on 31 Oct 2012, 06:28 16

7. Daniel.P (Posts: 97; Member since: 14 Jul 2011)


True, but it also sold for around the $600 mark without carrier subsidies initially, and we have half of that price with the Nexus 4... at launch.

posted on 31 Oct 2012, 06:43 5

10. snotyak (Posts: 27; Member since: 05 Jun 2012)


That's a good point. I believe that since the target audience for Nexus phones has always been the developers, it'll sell well where it needs to. But for the others, who THINK they need LTE, expandable storage, removable batteries, etc. they'll be fine with their on-contract alternatives.

posted on 31 Oct 2012, 07:14 4

18. protozeloz (Posts: 5326; Member since: 16 Sep 2010)


Indeed

posted on 31 Oct 2012, 09:54

30. alfiehp21 (Posts: 17; Member since: 29 Aug 2012)


Agreed. Also, i believe this phone will impact in places where you can get it via the play store. The real differences is that, Google Play doesn't support all country for their hardware sales. If i could buy it directly from the play store, i would and some of my friends will too. But for the high markets sales, it definitely will impact it. Is a really great phone. +1

posted on 31 Oct 2012, 09:55 2

31. remixfa (Posts: 13902; Member since: 19 Dec 2008)


that's when you get one of those programs to fake your country when you load up the google play store online. Then see if it will let you ship it to your house anyways.

posted on 31 Oct 2012, 10:21

33. protozeloz (Posts: 5326; Member since: 16 Sep 2010)


Shhh Google will Hear you *thin foil*

posted on 31 Oct 2012, 06:16 13

2. Cyan3boN (Posts: 423; Member since: 23 Feb 2012)


the nexus 4 would certainly cannibalize the sales of the optimus g. I was looking to the buy the optimus g. now I'll go for the nexus 4.

posted on 31 Oct 2012, 06:22 10

5. wendygarett (unregistered)


but overall it does not affect OEM much, because of the differentiate of the UI, i just see the review of optimus g and its skin is still as awesome as sammy touchwiz, and I dont understand those negative comment about it.

Pay expensive optimus g for the premium looking design and premium feel quality is worth it, but that just my thought, besides, it come with 32gb of storage dude, it won't harm much...

posted on 31 Oct 2012, 07:13 7

17. MeoCao (unregistered)


Sure but does it matter?

Nexus 4 is LG phone too and they will get money from each Nexus 4, and they get their brand boosted by association with Google at the same time.

And I think that LG can sell Nexus 4 where Google Play is absent and that's a lot: India, China...

And last but not least: a win against SS is very sweet and worth a lot of money too.

posted on 31 Oct 2012, 07:53 3

21. Cyan3boN (Posts: 423; Member since: 23 Feb 2012)


I'm from india and Google play is present here. Although its not present in some of the neighbouring countries such as Bangladesh and CHINA. and the word from a LG exec is that they are bringing the device at the end of next month, so Nexus 4 for me :)

posted on 31 Oct 2012, 06:19 6

4. Nikolas.Oliver (Posts: 1340; Member since: 01 Jul 2012)


For those whose country doesnt have a google play brace yourself ! Dont expect it to be under $400, in my country a lg spokeperson has just confirmed that they will sell it above $500

posted on 31 Oct 2012, 06:47 6

12. Darkerm (Posts: 98; Member since: 31 Jan 2012)


Same here in Bangladesh :(

posted on 31 Oct 2012, 08:13 1

23. nagirodu (Posts: 12; Member since: 13 Jul 2011)


If that's the case, then I have to purchase it from Grey Market like the previous Galaxy Nexus for a reasonable price.

posted on 31 Oct 2012, 06:24 8

6. jove39 (Posts: 1205; Member since: 18 Oct 2011)


"...the current $600 and up SIM-free mantra for high-end devices has been busted pretty unpleasantly by Google".

Love the way you wrote it :)

posted on 31 Oct 2012, 06:32 1

8. anywherehome (Posts: 971; Member since: 13 Dec 2011)


HTC falls so they as well need to make a Nexus device
great great competition!!

posted on 31 Oct 2012, 06:44 6

11. Bozzor (Posts: 88; Member since: 02 May 2012)


I do not believe that other Android manufacturers are the only target for this handset. Nexus 4 will definitely have an impact on Windows Phone 8 adoption and it will likely also hit a few iPhone users who are only marginally loyal to the Apple Way. Google wants to lock you into the pure Google world, and the hardware cost is not that great considering other benefits.

Oh...and part of my work is advisory on the financial performance for many handset and component manufacturers. Let's just say this handset is causing me to revise some numbers...severely.

posted on 31 Oct 2012, 07:06 4

16. onggeo (Posts: 30; Member since: 20 Mar 2012)


Don't forget those coming from feature phones which I think would be a great target market for the 8GB model.

posted on 31 Oct 2012, 07:17 2

19. Daniel.P (Posts: 97; Member since: 14 Jul 2011)


Right, "survival of the fittest" time came when Microsoft really stepped up to the plate with the Win8/WP8 launches, but the Nexus 4, 7 and 10 are making things even more complicated to predict now.

Also, the Play Store devices availability is not in every country, but those where the Nexus gear will sell are likely to consume more paid content as well, gripping to the platform further...

posted on 31 Oct 2012, 06:52 2

13. dragonscourgex (Posts: 307; Member since: 16 Jan 2012)


I hope this will cause some of the prices to go down. A win for the consumer. If, I wouldn't have a year left on Verizon, and if At&t service was not lacking in my area, I would switch to a GSM provider and give the Nexus 4 a go.

posted on 31 Oct 2012, 07:02 1

14. onggeo (Posts: 30; Member since: 20 Mar 2012)


Here in the Philippines I expect the price at launch to be around P13k-P15k (~$315 - ~$364) for the 8GB and additional P2k-P3k for the 16GB. I don't think LG will sell the phone here themselves cause the GNex wasn't sold here by Samsung. People usually get phones from grey market sites which have much more competitive pricing. For comparison, Galaxy S3 in Samsung stores costs P28k or around $680 while in online stores they cost P23k or around $560.

posted on 31 Oct 2012, 07:04 2

15. Aeires (unregistered)


More like prices are moving towards what they should have been all along. The iPhone set a standard for high priced phones and everyone followed but now that Amazon shook up the tablet world, Google is doing the same with phones. Will we see less phone OEMs? Could be, but the small companies that might go away weren't heavy hitters anyway so for some they'll be missed, just not by the average consumers.

posted on 31 Oct 2012, 07:50 1

20. DerryAhmad (Posts: 179; Member since: 05 May 2012)


Just read an article today where an LG rep stated that LG is planning on selling the Nexus 4 around $500 (or more) in Indonesia. I hope he's joking.
It's too bad that Google isn't selling the Nexus devices directly here..

posted on 31 Oct 2012, 08:07 2

22. remixfa (Posts: 13902; Member since: 19 Dec 2008)


Honestly, I think.. everything is going to be status quo.

As much as we love the Nexus4's pricing and powers, its still a niche device. Unless you are a tmobile customer, you will likely not see one in stores. Hell, even through Tmobile its more expensive than 350.. that's a Play store only discount.

If it's not in stores, on advertisements, or in everyone's hands, your not likely to even know it exists. It makes big waves in the tech community. Unfortunately for the rest of the world, the tech community is a tiny fraction of the masses.

That said, companies like HTC really need to follow the route. They have nothing to lose and everything to gain. If they cant compete with Samsung and Apple at the high end, then they need to take a page from Samsung's book and offer more features for less money. That's one of the reasons samsung got popular to begin with. The SGS offered a hell of a lot more bang for the buck and at less money on most carriers than its competition.

HTC needs to quit pretending its premium, rock high end specs from the 400-500 unlocked (100-200 on contract) range and drum up excitement again. Then just like samsung did, when you have the popularity, jack your pricing up while keeping the specs super high.

The Nexus is the exception, not the rule. But other companies should look at it as an example as well.

posted on 31 Oct 2012, 08:31 1

24. speckledapple (Posts: 877; Member since: 29 Sep 2011)


Downward pressure on price for high-end phones might be harder to come by with the iPhone in the mix. As being one of the most expensive phones around, carriers might just decide to push more iPhones rather than dramatically lower the prices on other phones. My hope is that with actions taken by Google and its Nexus line of devices, it would put a little pressure to pack more in the same space while at least lessening the effect of price.

posted on 31 Oct 2012, 09:45 2

28. remixfa (Posts: 13902; Member since: 19 Dec 2008)


you obviously dont understand how phone pricing works. Carriers LOSE money on iphones hoping to make it back on the more expensive plans.

Who pays for that? We ALL do. Why do you think fees have gone up so much over the last few years.. compensation for iphone BS.

The carriers are not lowering the price of the phones, the manufacturers would be.. which means less costs for carriers and for us. Instead of rising fees and plans, maybe we will see a few shrinkages.

but that's assuming this will have any price effect on the market.. and I doubt it will.

posted on 31 Oct 2012, 09:40

26. rickywinataa (Posts: 262; Member since: 05 Apr 2012)


google don't take any profit from the selling of nexus devices, at least in some countries that have complete google play services.

google is providing services & they create hardwares that is optimised to use those services.

posted on 31 Oct 2012, 09:41

27. imkyle (Posts: 947; Member since: 18 Nov 2010)


Look at it this way. Samsung Made the last two versions, and their Galaxy S series still flourished.

posted on 31 Oct 2012, 09:51

29. ChafedBanana (Posts: 352; Member since: 20 Sep 2011)


Its pity the N4 won't even be LTE. So the biggest carrier (VZW) in the U.S. won't get it? Pity. Total pit.

posted on 31 Oct 2012, 10:07

32. harpdogg (Posts: 18; Member since: 17 May 2012)


Unless google starts opening up google stores to sell phones. The nexus phone will not effect the current pricing model. The people that buy the Nexus are "phonies" People that read about phones all day here at phonearena and look up specs all day. The vast majority of people will buy there phones at there respective providers. At a ATT, Verizon, Tmobile stores or websites in the united states. Where being unlocked is really not that big of a deal. And most people are perfectly fine with there current provider. And all a contract means to them is a discount on a phone not a loss of freedom. Also until we start to see a real difference between dual cores vs quad cores. most people wont even notice.

Also while for "phonies" having the lastest version of andriod is cool. But for most people that just want a stable phone that lets them web browse, text, and socialze. ICS is fine. For them constanstly getting updates could be a bad thing. I think we all agree ICS is a very good OS. So for most standard users they may not even notice the difference between ICS and Jellybean.

posted on 31 Oct 2012, 15:09

34. The_Innovation (Posts: 531; Member since: 18 Jul 2012)


Hey Google!

.....thanks.

posted on 01 Nov 2012, 00:04

35. predator93 (Posts: 119; Member since: 28 Aug 2012)


It may happen, if it gets launched in China and India. Smaller Android makers are more prominent here.

posted on 01 Nov 2012, 03:20

36. Zarak (Posts: 23; Member since: 21 May 2012)


Will Google do something like trading your old Galaxy Nexus with new Nexus 4?

posted on 01 Nov 2012, 19:11

37. aoikemono27 (Posts: 177; Member since: 27 Feb 2012)


This is good news. It's about high time flagship phones came back to earth on the pricing. So many are $600+, and that includes HTC and Samsung phones. When you can buy a fully decked out laptop at that price, there's something wrong. All these ridiculous patent payments and extraneous costs that balloon the price of a smartphone. Smartphone are everyday household items, not luxury ones. Consider how high priced even midrange phones are and how the Nexus 4 with its high specs can crush them at a lower price even, there seems to be a lot of unnecessary fat that needs to be trimmed.

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