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

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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37 Comments

1. snotyak

Posts: 27; Member since: Jun 05, 2012

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

3. bloodline

Posts: 706; Member since: Dec 01, 2011

Galaxy nexus was very underrated.

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.

25. muck1

Posts: 13; Member since: Mar 02, 2012

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

7. Daniel.P

Posts: 127; Member since: Jul 14, 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.

10. snotyak

Posts: 27; Member since: Jun 05, 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.

18. protozeloz

Posts: 5396; Member since: Sep 16, 2010

Indeed

30. alfiehp21

Posts: 17; Member since: Aug 29, 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

31. remixfa

Posts: 14605; Member since: Dec 19, 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.

33. protozeloz

Posts: 5396; Member since: Sep 16, 2010

Shhh Google will Hear you *thin foil*

2. Cyan3boN

Posts: 446; Member since: Feb 23, 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.

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...

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.

21. Cyan3boN

Posts: 446; Member since: Feb 23, 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 :)

4. Nikolas.Oliver

Posts: 1574; Member since: Jul 01, 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

12. Darkerm

Posts: 322; Member since: Jan 31, 2012

Same here in Bangladesh :(

23. nagirodu

Posts: 12; Member since: Jul 13, 2011

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

6. jove39

Posts: 2140; Member since: Oct 18, 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 :)

8. anywherehome

Posts: 971; Member since: Dec 13, 2011

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

11. Bozzor

Posts: 248; Member since: May 02, 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.

16. onggeo

Posts: 30; Member since: Mar 20, 2012

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

19. Daniel.P

Posts: 127; Member since: Jul 14, 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...

13. dragonscourgex

Posts: 307; Member since: Jan 16, 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.

14. onggeo

Posts: 30; Member since: Mar 20, 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.

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.

20. DerryAhmad

Posts: 296; Member since: May 05, 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..

22. remixfa

Posts: 14605; Member since: Dec 19, 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.

24. speckledapple

Posts: 902; Member since: Sep 29, 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.

28. remixfa

Posts: 14605; Member since: Dec 19, 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.

26. rickywinataa

Posts: 262; Member since: Apr 05, 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.

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