I’ll be the first to admit that my first reaction to T-Mobile’s Value Plan pricing on the Nexus 4 was one of aggravation and frustration. As I saw it, T-Mobile appeared to be bumping the off-contract price against Google’s own pricing making any Value Plan deal with T-Mobile not much of a deal at all.
As it turns out, perhaps the fault doesn’t rest at T-Mobile’s feet, but at Google’s. The disparity with pricing from T-Mobile isn’t what set off my concern that perhaps I jumped the gun, it was a story coming out of Spain and Italy that has LG hiking up the price of the phone causing at least some carriers to back away from carrying the phone altogether. This price hike has caused Spanish retailer Phone House, Spain’s version of the UK retailer Carphone Warehouse to announce via its Facebook page that they planned to suspend sales of the Nexus 4.
Madrid, November 2, 2012
Phone House, the largest independent chain of telecommunications in Europe and Spain, it will release the new Google Nexus 4 and LG, whose launch was scheduled for November 13 in the catalog of this month
Phone House has decided to suspend the sale of this product after finding that the recommended retail price by LG of 599 € and conditions offered for commercialization are worse than the MSRP published by Google on its website and does not maintain the commitment with customers and offer the lowest price guarantee that characterizes Phone House.
Fortunately, Spanish customers are fortunate enough to have access to the Play Store and the ability to buy devices directly from Google. Whereas Google’s price will be €299 for the 8GB model and €349 for the 16GB model against LG’s price to the carriers of €599. Needless to say, the price isn’t competitive for the carriers when compared to Google’s own Play Store offering.
The same carrier concern is reaching over into Italy and Austria, where customers cannot purchase directly from Google and the Play Store. Therefore, they are at the whim of the carriers and thanks to LG’s price hike, customers are feeling a little slighted. This is where my concerns over T-Mobile’s Value Plan pricing comes into play, why pay carrier pricing when you buy directly from the Play Store?
All of this begs the question whether or not Google is subsidizing the price of the Nexus 4 through their own channels to lock in future Play Store sales. If that is the case, I can’t lay the blame at T-Mobile’s feet and I did jump the gun placing blame and directing my frustration Magenta’s way. Still, all things being equal, there’s an argument to be made that you should buy the phone directly from Google, contract free and not include the carrier.
Which takes us back to T-Mobile and my original concern that T-Mobile was just adding in a high margin, but perhaps I was wrong in that regard too. The problem is that we’d normally never think twice about a $500-$600 off contract price because thats a fairly standard no-contract price for top of the line smartphones. The Nexus 4 is a unique case because of the disparity between carrier pricing and that of Google. Which again begs the question whether or not Google is taking a smaller cut and/or razor-thin margins to get this phone into the hands of as many people as possible, including developers. Google is likely less worried about profit from the hardware and more worried about how much they can proliferate the market with stock Android devices.
That may be well and good for Google , but it seems as though pricing over the Nexus 4 and carrier subsidies is causing a lot of aggravation around the world.