[Rumor] Google May be Eating the Costs of the Nexus 4 by as Much as $380

[dgstorm]

If this latest intel is accurate, then Google may actually be subsidizing a large portion of the new Nexus 4 smartphone. In fact, they may be eating up to $380 dollars in costs to sell that device at such a low price point. Apparently, LG is selling the Nexus 4 to retailers in Europe for far more than what Google is selling it for on the Play Store. Here's a quote with some more detail,

Specifically, TheNextWeb found that LG (066570) is selling the Nexus 4 to retailers in Europe for €599 ($766), or €300 ($384) more than what Google is charging for the device on its Google Play store. 9to5Google says that it wouldn’t be surprised if Google is subsidizing the Nexus 4, saying that the device has a “seemingly impossible $299 price for the 8GB model” that includes “a beautiful 1280×768 IPS Retina-quality display, insanely fast Qualcomm s4 Krait chipset with 2GB of RAM, 8 megapixel cameras and beautiful design.”

It probably isn't surprising that Google might see this as an opportunity cost to help build up the Android ecosystem. The company is doing remarkably well and can easily afford this as a "psuedo-marketing" stunt. Ultimately, Google probably doesn't care if it makes money on the hardware, because its primary source of revenue is ad traffic anyway. This begs the question: is this a sustainable business model?

Be sure to check out our dedicated sister-site for more Nexus 4 discussions. You can find it @ Nexus 4 Forum!

Source: Nexus4Forum via BGR

 

[les017]

I'd be surprised if anything resembling this level of subsidy is sustainable by Google. I'm no financial analyst, but I can't imagine that the volumes would be high enough with this phone to constitute a tide shift into ever-escalating nexus sales. Just my layman's opinion.

 

[Chocula78]

I call BS on this info. The Nexus 7 costs less than $199 to build and that's well known. How can the addition of an HSPA+ radio cause a $100 price increase because the screen is smaller than the Nexus 7 providing a cost savings.

 

[TisMyDroid]

My guess is that Google is still making a healthy profit on the N4 in the US and an even greater profit in the UK. But this kind off press is a great marketing scheme because people in the US will be jumping on this thinking they're getting a great deal.

It is a matter of cultural consumer attitudes. In Europe, those that can afford to buy smart phones actually think it is more prestigious and will brag more the more expensive an item is... In many areas of Europe, people will even boast that they spent more on an item than what they did and would never brag about how inexpensive an item was. This would be embarrassing. Given this cultural difference, it is very convenient for retailers/manufacturers to inflate the price on what would be considered luxury items.

In the US, it is the complete opposite...we will boast how inexpensive we were able to purchase an item.

 

[tmal2]

If this latest intel is accurate, then Google may actually be subsidizing a large portion of the new Nexus 4 smartphone. In fact, they may be eating up to $380 dollars in costs to sell that device at such a low price point. Apparently, LG is selling the Nexus 4 to retailers in Europe for far more than what Google is selling it for on the Play Store. Here's a quote with some more detail,



It probably isn't surprising that Google might see this as an opportunity cost to help build up the Android ecosystem. The company is doing remarkably well and can easily afford this as a "psuedo-marketing" stunt. Ultimately, Google probably doesn't care if it makes money on the hardware, because its primary source of revenue is ad traffic anyway. This begs the question: is this a sustainable business model?

Be sure to check out our dedicated sister-site for more Nexus 4 discussions. You can find it @ Nexus 4 Forum!

Source: Nexus4Forum via BGR

I think everyone is forgetting that retail price means nothing. Cost of manufacturing does. Just because it's selling in Europe at that price does not mean that's how much it costs to build.

 

[94lt1]

I think the reason it sells for so little here is because it doesn't have lte..

Which makes me wonder.. is Google fed up with vzw kissing apples butt, yet trying to keep control on what android is doing on their network...

If you think about it, android has the leads now.. if Google yanks the plug on vzw's network... it would be bad for vzw. Perhaps this is a test to see what kind of numbers they can get without big red...

Its doubtful... but ya never know..

 

[akhenax]

I think the reason it sells for so little here is because it doesn't have lte..

Which makes me wonder.. is Google fed up with vzw kissing apples butt, yet trying to keep control on what android is doing on their network...

If you think about it, android has the leads now.. if Google yanks the plug on vzw's network... it would be bad for vzw. Perhaps this is a test to see what kind of numbers they can get without big red...

Its doubtful... but ya never know..

It could still get LTE and either be on another carrier other than VZW.

 

[52brandon]

they could be losing money on it. Wouldn't be the first product to do so. Gaming consoles lose money on release. But they recoup costs on game licensing. I'm not sure where google could recoup on this. Do developers pay to be on "Play Store"? I didn't think they did...