Google recently launched their new Google Nexus 4 smartphone, the device is made by LG and Google are selling it from their Google Play store for 299 Euros for the 8GB model and 349 Euros for the 16GB model.
According to a recent report by The Next Web, Google may actually be subsidizing the price of the handset when it is sold direct through Google Play, as one Spanish retailer has been given a different price by LG for the handset.
According to Spain’s Phone House, LG have given them a recommended retail price for the new Google Nexus 7 of 599 Euros, which is double what Google are selling the device for.
The retailer has decided not to sell the Google Nexus 7 because of the high price compared to what Google are selling it for, so it could be that Google is actually subsidizing each handset they sell, or they could be selling it at cost.
Google’s Strategy with Nexus 4 Pricing
Google’s pricing strategy for the Nexus 4 has raised eyebrows and sparked discussions across the tech community. By offering the device at a significantly lower price point through their Google Play store, Google is making a bold move to capture a larger market share. This approach is not entirely new; tech giants often subsidize hardware to promote their ecosystem. For instance, Amazon has been known to sell its Kindle devices at a loss to drive sales of e-books and other digital content.
In the case of the Nexus 4, Google might be aiming to increase the adoption of its Android operating system by making high-quality smartphones more accessible. This could lead to a larger user base, which in turn would attract more developers to the platform, creating a virtuous cycle of growth and innovation.
Implications for Retailers and Consumers
The disparity in pricing between Google’s direct sales and traditional retail channels has significant implications for both retailers and consumers. Retailers like Spain’s Phone House are put in a difficult position. They cannot compete with Google’s subsidized prices, leading some to opt out of selling the Nexus 4 altogether. This situation highlights the challenges brick-and-mortar stores face in an increasingly digital marketplace.
For consumers, the lower price point is undoubtedly attractive. It makes high-end technology more affordable, potentially democratizing access to advanced features and capabilities. However, it also raises questions about the sustainability of such pricing models. If Google is indeed selling the Nexus 4 at a loss, how long can they maintain this strategy? Will prices eventually rise, or will other manufacturers be forced to lower their prices to stay competitive?
Moreover, the Nexus 4’s pricing strategy could influence the broader smartphone market. Competitors may feel pressured to adjust their pricing models, leading to a more competitive landscape that benefits consumers. On the other hand, it could also lead to market consolidation, where only the largest players with deep pockets can afford to compete.
In conclusion, Google’s launch of the Nexus 4 and its aggressive pricing strategy have stirred the pot in the smartphone market. By potentially subsidizing the device, Google is making a calculated bet to expand its ecosystem and user base. While this approach offers clear benefits to consumers, it also poses challenges for traditional retailers and raises questions about the long-term sustainability of such pricing models. As the market continues to evolve, it will be interesting to see how other players respond and what this means for the future of smartphone pricing and accessibility.
Source The Next Web
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