Market Insight

Google continues to disrupt the smartphone market with competitive pricing

November 01, 2013

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Google unveiled its latest smartphone from its developer-focussed Nexus line. It will launch in the US, Canada, the big 5 in Western Europe, Japan and South Korea from November 1st

The Nexus 5 features a 4.95 inch 1920x1080 IPS-LCD with a quad-core 2.3GHz Snapdragon 800 processor, 2GB of RAM and two storage options; 16 GB and 32 GB. LTE band support varies by region.

The Nexus 5 will come with an 8MP with optical image stabilisation (OIS), with an aperture of f/2.4. It will also feature a 2300mAh battery, 200mAh bigger than its predecessor.

In addition, Google has released its latest build of Android; 4.4 KitKat.

The Nexus 5 will be the second Nexus device manufactured by LG following the Nexus 4. The previous two Nexus devices (Nexus S and Galaxy Nexus) were manufactured by Samsung, and before that, the Nexus One was made by HTC. The new Nexus 5 will be based on LG's current flagship, the G2, whose power and volume keys are on its back. Google chose not to follow LG's radical button arrangement and kept its conventional buttons placement on the sides of the device.

The pricing of the Nexus 5 continues Google's strategy of significantly undercutting its competition. The Nexus devices were originally aimed at developers, giving them a platform for testing. They are still aimed at tech savvy consumers, with Google doing very little marketing and advertising. The price makes the devices very attractive amongst the tech savvy users and which Google sees as key influencers for both the developer community and the broader market. As a result, it is unlikely that Google will be seeking a profit from the sales of its smartphones. The Nexus 5 will start at $349 which is over $200 cheaper than any comparable flagship device. Prices for Apple's iPhone 5S start at $649, and Samsung's Galaxy S4 at $579. LG's G2, the smartphone the Nexus 5 is loosely based on, starts at around $600.

Despite the relatively cheap price tag, Google managed to address the main limitations of the Nexus 4; lack of LTE connectivity, weak camera, and limited storage. Unlike the Nexus 4, the Nexus 5 will feature more generous storage options (16GB and 32GB instead of 8GB and 16GB). Google has also improved the camera by replacing the previous sensor with a new sensor with optical image stabilisation (OIS) which will allow for speedier auto-focussing and fewer blurry photos.

The most important improvement on the hardware side is the inclusion of an LTE antenna. Last year, when Google launched the Nexus 4, LTE was not generally available in Europe. This year the all operators in the Big 5 of Western Europe are putting their weight behind LTE deployments and the more tech savvy consumer who would be interested in a Nexus device will be looking for 4G compatibility. Thanks to multi-band LTE chip development Google was able to limit the Nexus 5 to only two variants; one for the US frequencies and one for the rest of the world. This is very important because this ensures its unlocked Nexus smartphones are compatible with most networks and limits Google's hardware costs per device.

An area where the Nexus 5 may suffer is battery life. Despite adding an always on listening feature, its battery is significantly smaller than other Android flagships. The Android 4.4's better memory management and general improved efficiency will partially address this but it is unlikely to match the battery life of a larger smartphones such as LG's G2.

By manufacturing a second Nexus phone, LG will continue to boost its profile in the Android market as a high quality player. The Nexus 4 helped get LG noticed in a crowded market place, and with the Nexus 5 LG will be able to maintain its visibility as an OEM as it continues to chase after Samsung. 

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