T-Mobile recently announced their pricing for the Google Nexus 5 on their network. The handset will set you back a total of $449 over a two-year period.
The Google Nexus 5 is available for $349 direct from Google Play, and now T-Mobile has explained to Cnet why they charge more than Google. According to T-Mobile, this is how much they pay for the handset when they buy it direct from LG.
This ties in with what we heard from the UK mobile carriers last week, who are actually paying more for the handset when they buy it direct from LG than Google sells the device for on the Google Play Store.
Google’s Pricing Strategy
As we have been saying over the last few weeks, it looks like Google is selling the Nexus 5 at cost, or very close to the cost price. The handset retails for £299 in the UK direct from Google, but third-party retailers and mobile carriers are selling the device for £399 in the UK. This pricing strategy by Google is quite intriguing and suggests that Google might be using the Nexus 5 as a loss leader. By selling the device at or near cost, Google can attract more users to its ecosystem, potentially increasing revenue through services and app sales on the Google Play Store.
The Google Nexus 5 comes with some impressive high-end specifications. Similar handsets retail for around $500, whereas Google manages to sell the device for $349 direct. This significant price difference raises questions about Google’s long-term strategy and how it plans to sustain such pricing.
Impact on Mobile Carriers and Retailers
The pricing discrepancy between Google and mobile carriers like T-Mobile has broader implications for the market. Mobile carriers and third-party retailers often rely on handset sales to drive revenue. When a manufacturer like Google undercuts them by selling directly to consumers at a lower price, it can create tension and force carriers to justify their higher prices. T-Mobile’s explanation that they are selling the Nexus 5 at the price they pay LG highlights the challenges carriers face in competing with manufacturers who have direct-to-consumer sales channels.
Moreover, this situation is not unique to T-Mobile. Other carriers around the world are experiencing similar challenges. For example, in the UK, mobile carriers are also paying more for the Nexus 5 when they buy it directly from LG than what Google charges on the Google Play Store. This has led to a retail price of £399 for the Nexus 5 through carriers, compared to £299 when purchased directly from Google.
The Nexus 5’s pricing strategy could potentially influence future negotiations between carriers and manufacturers. Carriers might push for better wholesale prices or seek alternative ways to add value to their offerings, such as bundling services or providing exclusive deals.
The Google Nexus 5’s pricing strategy has created a ripple effect in the mobile market. By selling the device at or near cost, Google has positioned itself as a competitive player, potentially at the expense of mobile carriers and third-party retailers. This move could lead to changes in how carriers negotiate with manufacturers and how they price their devices in the future. As consumers, we benefit from lower prices and more choices, but the long-term impact on the industry remains to be seen.
Source Cnet
Latest Geeky Gadgets Deals
Disclosure: Some of our articles include affiliate links. If you buy something through one of these links, Geeky Gadgets may earn an affiliate commission. Learn about our Disclosure Policy.
