LG to ramp up production of Google's Nexus 4

LG to ramp up production of Google's Nexus 4

Summary: Demand for the new Nexus 4 has exceeded Google's expectations, and now LG is ramping up production to keep up with demand. But how much of this demand is down to the low price of the handset?

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Google is having a tough time keeping the Nexus 4 in stock, and once again handset manufacturer LG is pointing the finger of blame at Google for the shortages.

(Credit: Google)

Speaking to French technology website Challenges, LG France's director of mobile communications Cathy Robin said that Google misjudged the potential demand for the device.

In the interview, Robin said that the supply issues are down to inaccurate sales forecasts by Google based on the previous sales history of Nexus handsets.

It should probably comes as little surprise that the Nexus 4 is a huge hit. It is a fantastic handset — large screen, powerful Qualcomm Snapdragon S4 Pro processor, and the latest Android 4.2 "Jelly Bean" operating system — at a very competitive price. It's pretty much everything that an Android user would want.

Price is particularly attractive when you compare it to other high-end handsets. An unlocked Nexus 4 will set you back $299, compared to around $750 for an unlocked Samsung Galaxy S III.

This huge difference in price would suggest that someone — more than likely Google — is heavily subsidizing the price of the handset in order that it gain traction, and that this is the reason why it is in such heavy demand, especially in Europe.

See alsoHow to turn your tablet into a mobile workstation

While competitive pricing is good for both Google — because it wants to increase Android market share — and consumers looking for a cheap handset, it's not so good for the wider Android industry. Outside of Samsung — a company that seems to have an iron grip on the Android market — vendors hare having a hard time carving out a viable market. Profit margins are already razor thin, and Google throwing money behind its own handset will do nothing to help the other players.

Google's willingness to lose money in order to give its handset an advantage over the competition should make other players nervous. Google has huge amounts of cash at its disposal and, unlike other players, doesn't have to rely on the hardware to turn a profit.

Topics: Android, Google, Smartphones

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17 comments
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  • can't win

    Google is always getting knocked for not getting control of the fragmentation issue. Well maybe this is part of what they are doing here. What's it going to be? Samsung has had big success even with apple pricing, so that means others can too.
    deathjazz
    • agreed

      maybe it's time for other device manufacturers to sell devices with vanilla android as well. They are going to lose customers to the Nexus, or they are going to lose customers to cheaper hardware. now we have both in one device. htc might as well jump on board with the "if you can't beat em, join em" strategy.
      ukjb
    • The nexus project started at addressing that...

      Google's nexus phone was rumoured to be designed to force OEM's to step up the game a bit. After all, the only thing that matters to OEM's is units shipped and profit per unit. To google the advancement of the platform as a whole is important.

      In his instance we know LG are more than capable of stepping up production. What it happening is google playing it safe. Selling phones at near cost is fine for them as their money comes from the google tie in on the android os. What isn't okay is to invest billions into a hardware that get's crunched up to make new Samsung's; their shareholders would be baying for blood and the whole platform takes a bloody nose. They simply mis-judged demand in this instance. their nexus tablets have massively increased the image of the brand since the last phone and demand has skyrocketed. far better to be having to order more units and limit your risk than being in Apple's instance of reducing orders because you over estimated. Plus having the phone constantly in demand looks pretty good at the same time.

      It may be a bit over cautious but they probably don't want to make their OEM's too angry by undercutting them, after all they do need partners such as LG to build the phones. LG may be loving the popularity as they do make money on each unit google sell, but not everyone is going to love being undercut down to near cost price by their partners. And besides it's good to see a company taking a sensible position on risk in the current market; even if they are one of the wealthiest in the world.

      Getting their estimates wrong is a bit atypical, after all if google don't know about their user's shopping and usage habits, what hope has any other company got?
      MarknWill
  • You guys are high!

    I can get an iPhone 5 for $199 so maybe the contract price is the only reason it is selling. I mean, after all, I bet the base model is the best seller right?

    Bottom line, people know the Nexus 4 is a great handset and the quality of pure Android is the best UI around. Yes, the fact that Google sells the phone at cost is a good benefit but, no it isn't the only reason to buy the phone.
    slickjim
    • Re: I can get an iPhone 5 for $199

      That's a contract-locked price. The Nexus 4 is going cheap at an outright, unlocked price.

      You're in the US, aren't you? You can always spot the ones who don't understand the concept of buying a phone that's not locked to a carrier...
      ldo17
      • It doesn't Matter

        I very well understand the concept of buying a phone but, why aren't all of these people opting for a second hand iPhone 4s? Or any other phone for that matter? Truth is, $349 or not, people would not but the phone if it wasn't attractive to them!

        People who don't understand the appeal of the actual Android interface have likely never used it and sorry it, most people in the USA buy their phones on contract so your argument doesn't stand up! If anything, it says a ton about the fact that people are actually willing to spend more than the $199 price for this phone as the contract is on the line and not the phone itself.
        slickjim
        • that trend is starting to come down

          because people are starting to realize they are getting raped by the service providers. More and more people are signing up for straight talk and net 10... its only a matter of time before the at&ts, verizons, and t-mobiles of the world are forced into reducing prices to compete, which means those $800 phones won't be subsidized as heavily... that's when cheaper unlocked phones like the Nexus 4 will thrive. And Google is proving it can work right now.
          ukjb
          • T-mobile already has competitive pre-paid plan

            You mention T-Mobile as if it doesn't have its own prepaid plan. It has a very good one in fact--4G unlimited data, 100 min. talk for $30.00 a month. I think this is the cheapest 4G plan available. Even more, a lot of people are buying the Nexus 4 to use on T-Mobile (that's my plan, as soon as I can buy a Nexus 4, of course).
            nematoda
  • Availability in Germany :-/

    Play Store says: NO, sorry!

    When this awesome device is available, i will buy it.
    Watchmen247
  • Google is not selling it at a lose

    Why do journalists keep spreading this lie?

    Robin also confirmed that rumors suggesting the Nexus 4 is being sold at a loss are false. “We have no incentive to sell it at a loss,” she said. “However there was an agreement between Google and LG to sell it at a very compelling price. And it’s true that €299 for the 8GB and €349 for the 16GB, that’s a super attractive price.”

    http://www.cultofandroid.com/21483/lg-france-mobile-chief-reveals-the-truth-about-the-nexus-4s-supply-problems/

    Also? Only takes around ~$200 to make an Optimus G (the phone that the nexus 4 was based on).

    https://plus.google.com/106075758531242552855/posts/EjAcaqoiWSM
    icyrock
    • you are right.

      I really wonder at times about unreasonable position people take just to talk. The same people will post how an iPhone or Android phone actual cost is around $200. For example, when iPhone was launched, it's cost was calculated around $179 and likewise Nexus one's cost was calculated around $176. I fail to understand what happened in few years that a phone sold at $300-350 somehow considered as being sold at loss to get the market. To my mind, the price point nexus is being sold is actually a well thought of and reasonable one where a customer is not ripped off by an overpriced piece many of the companies have been doing. People response has been reflecting just the reasonable step taken. But I think it won't be understood in a place like US as the concept of majority had been muddled by the so-called subsidized and free goodies.
      ashwinipn
  • Nexus 4 is the finest smartphone available

    I have both an iPhone 5 and a Nexus 4.

    There's simply no comparison. Nexus offers the pure Android experience with unlimited options available for the user customize the phone to their liking. Nothing else offers this, and nothing else provides the value that the Nexus does.

    Hands down there was a huge demand for very good reason. It keeps you out of the highly restricted locked down iOS ecosystem, and frees you to enjoy a world class smartphone.
    podnet
  • google doesnt subsidize anything

    the bill of material for this smartphone is less then the selling price so there is no subsidy required
    snoonw
  • OS

    One of the points being missed here, is that Google devices get updates. Other Android devices rarely get an OS upgrade. In my opinion, this is one of the drawbacks of Samsung and others They neglect you as soon as you purchase.
    oskar401
    • Samsung updates my phones?

      Owned the Galaxy S2, Galaxy Note, and now the S3 and the Note 2 and Samsung pushes out updates frequently.

      Carrier branded phones put a big bump in that road as they must test and approve firmwares. That is the beauty of the Nexus lines and the factory unlocked Samsung phones.
      Sigfried Lance
      • NO WAY

        Just got rid of a 2month old SG3 it was running android 4.1. My nexus is running4.2.1,You're lucky indeed to see updates on other devices. It has nothing to do with as you say testing and approving firmware and everything to do with their own custom versions of the OS. This is what takes the time, if they used the plain vanilla version upgrades would be as developed by Google.
        oskar401
  • The Nexus 4 is not without its problems

    See this Google code forum for insight into wifi problems with the phone: http://code.google.com/p/android/issues/detail?id=40065

    Also see this blog post about one user's experience with the Nexus 4: http://things-linux.blogspot.com/2013/01/time-frame-of-nexus-4-wifi-bug-issues.html
    rober1s