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Is Google subsidizing the price of the $299 LG Nexus 4?


As part of our review of the Google Nexus 4, one of a game-changers we noted was its seemingly impossible $299 price for the 8GB model ($349 for the 16GB model).  With 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 is clearly a high end flagship phone.

Phones with those specs typically run in the $500-$700 range unsubsidized and the lack of a LTE chip in the Nexus 4 isn’t likely to drop the price down too terribly much.  Certainly not cut it in half.  Could Google be throwing in a few bucks to make this phone cheaper?  Certainly the Galaxy Nexus before it was a bargain at $349 but it had a significantly cheaper pentile display, less RAM, and an older generation chipset with a midrange 5 megapixel camera.

It isn’t easy to find non-subsidized prices in the US phone market but low-price prepaid carrier Virgin does offer phones at retail prices. Have a look at their higher end Android phones:


The Motorola Triumph is an over a year old 4-inch single core phone that got lackluster reviews. It currently sells for $279.99 unsubsidized. The $299.99 HTC EVO V is a rebrand of the EVO 3D which is almost two years old and was discontinued from Sprint when it moved away from WiMAX almost a year ago. Both of these phones are in a whole other league (Busch) than the Nexus 4.

T-Mobile, which will also sell the Nexus 4 on its website and at its stores, will offer the device in the following configurations:

  • Paired with a qualifying T-Mobile Value voice and data plan and two year service agreement, the Nexus 4 will cost an out-of-pocket down payment of $199.99 with 20 equal monthly payments of $15 per month via T-Mobile’s Equipment Installment Plan (EIP). The Value plan paired with EIP is offered at T-Mobile retail stores.
  • Customers can also purchase the Nexus 4 at T-Mobile retail stores and online for $199.99 (after a $50 Mail in Rebate) qualifying T-Mobile Classic voice and data plan and two year service agreement.

The $199 + $300 in monthly payments comes out to $500 for the same phone Google is offering for $350. The $199 with two year plan is the same price that other high end phones like the Galaxy S3 or even iPhone 5 cost on other carriers. That seems to imply that T-Mobile isn’t getting the Nexus 4 for the same $299 price…or they are adding a serious margin.

What tipped me off to the disparity wasn’t just T-Mobile, however…

In Spain and Italy, LG is offering the phone to its carrier partners for a significant price hike of the Google EU price of €299/349 notes The Next Web:

a statement on Phone House Spain’s Facebook page says that the company has discovered that LG will be offering it to them with a recommended retail price of €599. Although the retailer doesn’t say which model it’s referring to, the price isn’t exactly competitive when compared with buying direct via Google Play, amounting to a €250 to €300 price hike.

The sentiment is echoed in Italy, where angry would-be customers are taking to the LG Mobile Facebook page to protest against the huge disparity in pricing. The problem is more acute for Italian customers, as unlike Spain, Google has not yet announced plans to sell the Nexus 4 directly there. (Update: As Holger Eilhard tells us, the same problem is apparent in Austria too, with the 16GB model being the only one available, at €549).

So one might argue that Google is just selling the phone at price, but even at cost, the numbers above don’t make any sense.  LG is of course trying to make a profit but they have to know that their customers aren’t going to take the types of margins only Apple is able to get from its customers.

LG is also trying to sell its Optimus G phone to the same markets at much higher prices so the company could also be trying to avoid cannibalizing those sales. But again, the margins would seem to be too big.

We’ve reached out to Google for comment and will update if we hear anything.

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