googly dude admits high phone prices are a carrier/manufacturer scam

[OBLAMA2009]

http://www.droid-life.com/2012/11/0...d-calls-299-nexus-4-revolutionary/#more-88071

"“Basically we felt that we wanted to prove you don’t have to charge $600 to deliver a phone that has the latest-generation technologies. Simply that level of margin is sometimes even unreasonable..."

 

[Suspicious-Teach8788]

Guys, it's not just the US. Phones are bought unlocked around the world, and the standard price is $600. It's not just a carrier thing.

What Google says is "we can sell things for near BOM cost." Well duh. Apple could do that too. PC laptops were never sold with razor thin margins before, but now its a race to the bottom. Same with all semiconductor chips. Phones may soon fall in that category, and Google's the one leading it.

And if Google was interested in killing this high priced phone model, then they should've added more storage and possibly LTE.

 

[podspi]

Yea, really what they mean is that it isn't necessary to earn a profit per unit if you're earning a profit from the use of the device.

Same idea that Amazon has with the Kindle. They don't care much about making money off of the hardware, because they'll get you when you hit the marketplace.


What I want to know is, why are their partners (Samsung, ASUS, etc) willing to see Google piss away their margins like that?

 

[Yongsta]

Business 101, get the most money out of people as you possibly can. Computers used to cost $2500 - $3000 across the board when I was younger and they're much more affordable now. You're kind of seeing that with phones, lower tier phones can be had for cheap while the higher tier are at a premium.

 

[TuxDave]

Yea, really what they mean is that it isn't necessary to earn a profit per unit if you're earning a profit from the use of the device.

Same idea that Amazon has with the Kindle. They don't care much about making money off of the hardware, because they'll get you when you hit the marketplace.

What I want to know is, why are their partners (Samsung, ASUS, etc) willing to see Google piss away their margins like that?

Yeah I don't really get the "compete with your customer" approach but oh well, at least this will be a nice business lesson on what happens.

 

[Suspicious-Teach8788]

I really don't care that phones are $600. I'd rather see the trend of phone being tied to the carrier go away. It's mainly a US problem.

And even though Google is competing on a lower price point, people have made excuses for them for cutting corners on a few specs. If that's the case, you can't really truly compete against $600 phones if you're always going to justify $350 as a steal and being OK to leave out critical features.

 

[Bman123]

People are greedy as shit and money outweighs morals anymore. Its nice to see a huge company not price gouge the shit out of the consumers for once. You go google...

 

[Bman123]

Storage stops at 16gb, no sd card and no lte. So damn what, you cant make everyone happy all the time. This phone will sell like hotcakes and ill be buying one.

 

[TuxDave]

People are greedy as shit and money outweighs morals anymore. Its nice to see a huge company not price gouge the shit out of the consumers for once. You go google...

Something something we're not the customers, we're the product, etc....

 

[Red Storm]

Something something we're not the customers, we're the product, etc....

We're both actually, but with the competitors it costs more.

 

[TheStu]

People are greedy as shit and money outweighs morals anymore. Its nice to see a huge company not price gouge the shit out of the consumers for once. You go google...

The way the devices are priced are about as close as Google can get to charity while still actually charging money for them. There is no profit model built into the Nexus devices, they are sold very nearly at cost.

So think about it this way; Google, as a publicly traded company has to demonstrate to its shareholders that it is acting responsibly, and so in order to be able to keep the lights on, and continue to do wacky stuff like the self-driving car and Google Glasses, they need to turn a profit. If they aren't making a profit off of the devices, and license the OS to others for free... where are they making their money?

By having you use the device. Except that their stores aren't nearly as fleshed out as Apple's or Amazon's yet, so again, where are they making their money? The other ways that you use the device. Ads, usage analytics, things of that nature. You are Google's product that they sell to people that want to advertise through them.

I am not saying that companies that actually do sell their products for a profit are somehow... purer than Google, just make sure you actually know what it means if someone gives you something for free or at cost. Either they are your incredibly good friend, or they want something from you.

 

[OBLAMA2009]

you guys dont see anything wrong with carriers and manufacurers getting together and creating a system designed to keep prices artificially high? what if inte, amd, lenovo, hp etc.. all got together and did that with computers. would da gubment ivestigayt?

 

[cmdrdredd]

Yea, really what they mean is that it isn't necessary to earn a profit per unit if you're earning a profit from the use of the device.

Same idea that Amazon has with the Kindle. They don't care much about making money off of the hardware, because they'll get you when you hit the marketplace.


[bold]What I want to know is, why are their partners (Samsung, ASUS, etc) willing to see Google piss away their margins like that?[/bold]

Probably because Samsung offers more memory, LTE, and a micro SD card slot. Asus has their padphone thing which will probably sell in some markets pretty decently.

 

[kpkp]

It is not official but there are strong rumors that LG will sell the nexus 4 for a much diffrernt price. Countries without the playstore will get it for 549€ (700$).

I have so much more respect for Asus right now. I would raither see they wouldn't sell it at all, because that's just...

 

[ponyo]

The current carrier model reminds of the Apple's The Agency model for the online books. The carriers and the manufacturers are in on the phone pricing scam and this is Google's attempt to break it.

 

[dagamer34]

The way the devices are priced are about as close as Google can get to charity while still actually charging money for them. There is no profit model built into the Nexus devices, they are sold very nearly at cost.

So think about it this way; Google, as a publicly traded company has to demonstrate to its shareholders that it is acting responsibly, and so in order to be able to keep the lights on, and continue to do wacky stuff like the self-driving car and Google Glasses, they need to turn a profit. If they aren't making a profit off of the devices, and license the OS to others for free... where are they making their money?

By having you use the device. Except that their stores aren't nearly as fleshed out as Apple's or Amazon's yet, so again, where are they making their money? The other ways that you use the device. Ads, usage analytics, things of that nature. You are Google's product that they sell to people that want to advertise through them.

I am not saying that companies that actually do sell their products for a profit are somehow... purer than Google, just make sure you actually know what it means if someone gives you something for free or at cost. Either they are your incredibly good friend, or they want something from you.

I actually think that because the Nexus 4 is so cheap, Google's concession to LG on the Optimus G which would make far more money for them is low storage sizes and no LTE. This is especially true for Europe where there shouldn't be any red tape in building an LTE phone due to standardized bands.

 

[WelshBloke]

... I am not saying that companies that actually do sell their products for a profit are somehow... purer than Google, just make sure you actually know what it means if someone gives you something for free or at cost. Either they are your incredibly good friend, or they want something from you.

Those companies that sell their products for a profit aren't 'purer', they are doing the same things as well as charging you for the phone. Google just seems particularly good at generating a profit from it.

 

[Phokus]

The way the devices are priced are about as close as Google can get to charity while still actually charging money for them. There is no profit model built into the Nexus devices, they are sold very nearly at cost.

So think about it this way; Google, as a publicly traded company has to demonstrate to its shareholders that it is acting responsibly, and so in order to be able to keep the lights on, and continue to do wacky stuff like the self-driving car and Google Glasses, they need to turn a profit. If they aren't making a profit off of the devices, and license the OS to others for free... where are they making their money?

By having you use the device. Except that their stores aren't nearly as fleshed out as Apple's or Amazon's yet, so again, where are they making their money? The other ways that you use the device. Ads, usage analytics, things of that nature. You are Google's product that they sell to people that want to advertise through them.

I am not saying that companies that actually do sell their products for a profit are somehow... purer than Google, just make sure you actually know what it means if someone gives you something for free or at cost. Either they are your incredibly good friend, or they want something from you.

No manufacturer would partner with google to make these devices if there wasn't profit to be had. You honestly think LG would partner with google to make the Nexus 4 if the profits were really razor thin?

 

[TuxDave]

Those companies that sell their products for a profit aren't 'purer', they are doing the same things as well as charging you for the phone. Google just seems particularly good at generating a profit from it.

Just going to throw this out there because I couldn't think of a good answer for it. So when Samsung sells you a phone for profit, where do they get money back afterwards?

 

[magomago]

I think there is some google spin.

Lets pause and see what people are saying about the price - They are not complaining about the price. The price doesn't even figure as a factor into it.
The complaint is "I want more! Its a great price, but, I simply want more! Oh, and I might be willing to pay up to 50 bucks to get more!"[/b]

Google did lots of work to find 300-350 is that sweet spot for 'off contract' phones,& customers will accept the omission of certain features.

In fact, I'd take it a step further and say that google knows that, for 300-350, they could probably get many to upgrade and buy new nexus phones every 1-2 years. This is why storage isn't expandable, or the battery is sealed...they can get us to upgrade so as long as the overall Nexus Experience remains satisfying!

A 350 nexus4 16gig without LTE will fly off of shelves. It requires a justification for many to spend an extra 250 dollars to get an LTE phone with more space & a removable battery. I alone care a LOT about battery life, but for what I'm paying for and what I will get, and I can "live with it!"

Now, lets say the price was 400-450 dollars; the same awesome price, that still omits LTE, or expandable storage, or a replaceable battery is now not a 'home run out of the park".

 

[Mopetar]

No manufacturer would partner with google to make these devices if there wasn't profit to be had. You honestly think LG would partner with google to make the Nexus 4 if the profits were really razor thin?

It is not official but there are strong rumors that LG will sell the nexus 4 for a much diffrernt price. Countries without the playstore will get it for 549€ (700$).

If that turns out to be true, it would explain why LG is willing to build a version for Google that will be sold at cost or near to it.

I honestly doubt that LG even wanted to do it, but what are their alternatives? Samsung has dominated the Android space over the past few years and they don't show any signs of stopping. LG's choices were take a raw deal, or take no deal and not be any better off.

In some regards, Google doesn't have a choice. Amazon and B&N have already started selling their subsidized tablets, which were already going to heavily impact the sales of other Android devices. Google doesn't stand to make much money from those sales as they lock Google out, so Google might as well play the same game.

They didn't have to go there in the mobile space, at least not yet, but if Facebook or Amazon release an Android-based phone using the same strategy, Google will have to go there sooner or later. Also, the move may have been done due to the carriers and handset manufacturers constantly holding up Android updates. Honestly though, I think Google would have been better off setting the price at $400 and splitting the extra profit with the manufacturer. It's a better relationship, and will probably generate more profit for Google than they would gain through ads during the lifespan of the phone.

 

[WelshBloke]

Just going to throw this out there because I couldn't think of a good answer for it. So when Samsung sells you a phone for profit, where do they get money back afterwards?

Firstly if you have a Samsung phone its very likely to have android or maybe WP on it so your not escaping the 'impure' data scalping.
Secondly Samsung is desperate to sell you apps and media through the stock crapware they install.

I'm not convinced they aren't harvesting some location data as well, but that's just a suspicion based on some stuff I've disabled.