What is going on with the Nexus 4? *Updated*

What is going on with the Nexus 4? *Updated*

Since the Nexus 4 became available and then promptly sold out on the Play store a few weeks ago, thousands of customers have been waiting for their orders to be delivered and even more have been waiting just for the opportunity to place an order. Anyone who listened to this weeks podcast will know how annoyed Ravi is regarding the whole debacle and it seems he’s not the only one.

Heres the thing, the Nexus 4 is available elsewhere but at a much greater price. At first we assumed this was networks looking to profit from customers but it fast became apparent that this was going to be the general rule of thumb regarding retailer availability. The Nexus 4 is available from O2, Three and Carphone Warehouse all at a higher price than the Play store. Now the way I see it, there are a few explanations for this.

1) LG is selling the Nexus 4’s to retailers and the retailers are just adding their usual markups and Google is adding none and selling it at wholesale. If this is the case then thats fine.

2) LG is selling it to retailers for more than they are selling it to Google. If this is happening then, depending on how that deal has occurred, it could come under scrutiny. Generally speaking it isn’t strictly legal to do this but there are ways and means around it.

3) Google is selling them with a discount. This too could also come under scrutiny. Google does not make its money in hardware sales, it makes them in Ad revenue and so Google would be using profits from one area (Ads) to gain advantage in another (retailing). This could then be seen as anti competitive as it would have an adverse affect on other retailers.

4) Google is selling them at cost but in small numbers, so as not to anger retail partners and carriers by “stealing” potential customers .

A race to the bottom might seem like its the best thing in the eyes of the consumer because you get cheap products, but not every company has huge cash reserves like Google and Apple which means companies like HTC and Nokia would quickly go out of business as they wouldn’t be able to make a competing product at similar prices whilst making a profit. Which would ultimately result in a 2 horse race.

So heres my prediction. Number 4 is the most likely scenario. Google needs to keep retailers and carriers onside, as without them, Android fails. 4) allows Google to still sell the devices to developers and geeks but in small volume, allowing the carriers and retail partners to still sell the majority of units at the higher price. This will continue for at least a few months until demand dies down to a point where the small numbers Google adds to its inventory will be enough to satisfy demand.

I could of course be completely wrong.

Update: After speaking to a couple of sources at a major UK retailer they have confirmed to me that “The wholesale price of the Nexus 4 is higher than what Google are retailing it for on the Play Store” when pushed on this one source explained that they have had no issues ordering new stock and that the Nexus 4 doesn’t seem to be any more constrained than any other high end device excluding the iPhone.

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  • I’m buying from Carphone Warehouse. Tbh I don’t think Google will have more stock for a while and CPW are generally quite good, at least with sim-free unlocked phones.

    • I also agree number 4 is the most likely. Until Google can go all-out on hardware (could be a long time or not long at all, depending on how they play it) they have to keep OEMs and carriers happy.

      • I agree, Number 4 is what is going on…..I got mine from 02 after selling the Note 2 I had on ebay I still had some change….N4 best Android phone I have had so far.

  • Simon Allum

    I have soo many issues with your conclusion its hard to know where to start…so I won’t!!

    The only company that really know the answer are Google and they certainly aren’t going to tell us unfortunately!

  • I know this has got you all het up Jamie, but seriously, why do we care what’s going on?
    Personally I think its option 1, but I don’t see an issue with any of them. I think the anti-competitive argument is weak – if Google were doing that in volume, and anyone was complaining, only then would their be an investigation, but Google are far more cottage industry than any other tech company. Hardware is definitely a hobby, not a business for them, and they appear to be just selling a few Nexus for fun, but certainly haven’t invested any time or money into it – as the farcical ordering process shows!
    Google just want Android out there being seen, and they have the Nexus line to get the latest versions of Android out into the market, because their partners react slower than Google can produce new versions.
    All Google has to do is get Android out there and seen (new versions), and then sit back and let the world pick it up, driven by consumer demand – I really don’t think there’s a grand conspiracy, because frankly they’d have had a better plan!

    • If it was any hardware company, then maybe the conspiracy theory would stack up, but I think it falls because Google isn’t one, and doesn’t care about the hardware – they just want some “demo” versions of Android 4.2 out there, which is all this Nexus 4 is to them.

      • Guest

        I don’t think its a conspiracy theory. I just think its a very unusual way of doing things, hence why I presented all the options I could think of and picked one.

  • Anonymous

    #4 Makes sense …

  • Anonymous

    As per our discusion on Twitter, it’s all just conjecture. No reason to think it won’t just come back into stock at some point. If something different happens I’ll be the first to take issue.

  • oh my lord

    Either you are just posting and hoping the Nexus 4 in the title will generate interest or you haven’t got one and are miffed about it.it could well be that demand out stripped supply and you should well know number 1 is the answer.

  • Matt Wolfgang

    Regarding number 2: I find it very hard to believe that, even in the UK, wholesalers are obliged by law to give all retailers the same price. We’re not talking about price fixing across an entire category, it’s a special price on one model out of hundreds of available smartphones. If some retailers didn’t get a better price than others, what’s to prevent the wholesaler from charging an overly inflated price, and since there’s no negotiations?

  • smadger