Nexus 4, Nexus 7, Nexus 10, Nexus Q… Who would have thought just a year ago that Google would ever be able to build its own family of branded consumer electronics products so rapidly and much in the way Apple has built its iPhone, iPod and iPad lineups. Now, I opined in May that Google becoming a handset maker could spell trouble for Apple, not just concerning the iPhone maker’s thermonuclear war on Android but also realizing the vertical integration advantage this acquisition makes possible – even if we have yet to see Motorola-made Nexus phones born out of that partnership.
But Google becoming a hardware company changes market dynamics drastically, especially with much of the innovations in the Android camp happening in software right now. John Lagerling, Google’s director of business development for Android, sat down with Brian Chen of The New York Times to talk Nexus devices and how Google goes about designing them, here’s what came out of him…
For starters, the Motorola acquisition was “mostly about the patents” and both Redmond and Cupertino are evil empires because they’re in it for the money.
There are players in the industry who were unhappy about more competitive pricing for the consumers. They want to keep the prices high, they want to force the price to be so high that operators have to subsidize the devices very highly. That’s not only the Cupertino guys but also for the guys up in Seattle. They want higher margins, they want to charge more for software.
The article points out that Google’s strategy with the Nexus brand largely revolves around lower prices. And why low cost matters? Because it’s about “how can we get more people onto the Internet on mobile phones” so that Google could monetize those eyeballs buy selling them to advertisers at a premium.
That’s why Google is building its own hardware, really.
Google’s latest stock phone Android experience is the four-inch LG-built Nexus 4. Joshua Topolsky of The Verge panned the device over lack of 4G LTE and carrier support (it’s a T-Mobile-only play). On the other hand, it’s just $299 contract-free, less than half what Apple is expected to charge for an unlocked iPhone 5 once it become available in the United States.
@dujkan wait he is shaming google for building the best phone for the world?
— Anshel Sag (@anshelsag) November 2, 2012
It’s the closest thing to a cheap prepaid iPhone I’ve been expecting for ages.
@dujkan expectations are a bitch.
— Anshel Sag (@anshelsag) November 2, 2012
So how the hell did Google and LG manage to build such a sophisticated yet affordable smartphone?
Basically we felt that we wanted to prove you don’t have to charge $600 to deliver a phone that has the latest-generation technologies. Simply that level of margin is sometimes even unreasonable, and we believed that we could do this. For Nexus 7, we were able to ramp those new memory SKUs at the same price.
Turns out Google does know a thing or two about supply chain management after all.
These move so fast that we knew after a few months, from an economical perspective, it was doable. Between us and our partners we have a very good understanding of supply chains. We’ve all done the best we can to really reach these prices — $399, $299 is pretty amazing, if I may say so.
Interesting, even though Asus said Nexus 7 sales are approaching one million units, Lagerling wouldn’t discuss numbers. “We typically don’t allow our partners to announce numbers”, he said. “All I can say is it has sold way above expectations”. He also didn’t have the number for tablet-optimized apps in the Play Store.
Here’s a nice overview of the current Nexus lineup.
Now, even the most rabid Apple fans would have to admit that these devices look attractive, are pretty functional and – most importantly – within reach of an average consumer.
Google typically partners with OEMs on Nexus devices, with hardware teams often working alongside Android engineers at Google’s Mountain View campus.
Google recently retired its overpriced $299 Nexus Q media streaming orb
Asked why the company didn’t partner with its own subsidiary Motorola on the new Nexus phone, he replied:
They stand where Sharp would stand, or Sony would stand or Huawei would stand. From my perspective as a partnership director, they are another partner. We are really walled between the Motorola team and the Android team. They would bid on doing a Nexus device just like any other company.
If you want to learn even more about Nexus hardware and Google’s design process, do check out The Verge’s excellent write-up.
Wouldn’t you like to own one of the Nexus devices?
Or, do you think that after all is said and done Apple still has the edge?
Join us in the comments right below.