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Google Nexus 5 Pricing: Will lightning strike thrice?

Nexus 5 Press Image

Given that lightning already struck twice, a third time with the Google Nexus 5 launch, is not too unlikely. Many were expecting the Motorola Moto X Phone to have modest specifications, but to be released at US$299. This price was roughly around half the actual retail price. Next up, was the rumored US$399 Apple iPhone 5C. Apple announced the iPhone 5C at US$549. Now, we have another smartphone rumored to sell at an enticingly low price.

The Google Nexus 5 is rumored to be priced at US$299 to US$349. This price is based on the subsidized price of last year’s LG built Google Nexus 4. Given the reported  specifications of the Google Nexus 5, it seems hard to believe it will be sold for US$299 to US$349, not even in select countries.

The phone is expected to be based off LG’s new G2 and come with a 5-inch Full HD display, a Qualcomm S800 chipset and a 16MP camera with optical image stabilization. The LG G2 can be had off-contract for US$579 on AT&T, which is a already a good price for the handset. The Google Nexus 5 will be sold on Google Play, factory unlocked. A price of even as high as US$599 for a 16GB and US$649 for a 32GB model would already  force LG, HTC, Motorola, and Samsung to seriously consider cutting the price of their own flagship handsets.

A price of US$549/US$599 to match the Apple iPhone 5C 1GB, and undercutting the 32GB model of the same phone would be a super deal. This price though would really put the pressure on Google’s OEM partners.  A price of US$499/549, or lower, would probably obliterate the Android competition in any market where the Google Nexus 5 is offered at this price. Actually, if Google were to offer the Nexus 5 at a price of US$499/549, it would probably have the same effect on its OEM partners as selling it at US$299/US$349.

One reason why the Google Nexus 4 could be offered at US$299/US$349 is because Google chose to release a compromised handset. The Nexus 4 also launched without LTE. I do not see Google launching a Nexus 5 without LTE. Even without LTE, the Google Nexus 4 was only offered at this price in a few countries, being priced comparable to other Android offerings for the rest of the world. Google could cut other features like removing optical image stabilization, seriously downgrading the camera’s image quality, or maybe we will see more modest specifications in other areas.

Google wants its Nexus phone to be successful. But probably, not so successful as to destroy its OEM partners. A very low price for the Google Nexus phone would push its OEM partners off the unlocked and off-contract market everywhere the Nexus phone is offered at a low price. As a counterpoint, Google probably wants a bigger share of the US market. While Google and its OEM partner outsell the iPhone by over 5:1 worldwide, it is more like 5:4 in the United States, with Apple actually picking up a few points in the past year. Google could engage in a war of attrition with Apple in the United States and sell subsidized phones for killer prices off-contract and have the Nexus 5 sold free on contract. So there is still the possibility of seeing that US$299/US$349 price. Just imagine how well a Google Nexus 4 would have done if Google had enabled radio LTE on the Nexus 4 and being offered through carriers free with a contract.

I do not think Google will want to shake things up that much. I am betting on a price range of US$499/549 to US$549/US$599 for the Google Nexus 5, and for lightning to strike a third time.

 

3 Comments

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  1. To be honest, I believe this article is just full of rubbish!! Google have always said that they use the Nexus to show how they believe android run (not for profit). Last years Nexus was sold basically at cost price. This year will be the same.

    You are following the wrong pattern completely. Just look at the New Nexus 7. It costs a little more than last years model. This leads everybody (except you) to believe it will be the same will happen on the Nexus 5.

    Motorolla still need to make their own profit from their handsets, thats pretty much their only income.

    Google however get most of their profits from advertising, and so selling the Nexus at cost price to the masses gets more phones in more hands that will see more google adverts which will earn more profits for google.

    Its a cycle that benefits all.

  2. Well, if the rumored specifications are true, this phone will really by an Android flagship phone. Even the 2GB of RAM, instead of 3GB, is no biggie since vanilla is the lightest of all Android operating systems.

    Any kind of subsidy will give all existing Android phones a hard time.

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