What's the real reason behind the Nexus 4's price drop?

Anna Scantlin
Contributing Editor from Kansas City, MO
Published: August 28, 2013

Choo, choo! All aboard the train to Speculation Station, everybody's favorite train they wish they had never set foot on but always end up having a good time anyway. Following yesterday's news about the Nexus 4 dropping in price $100, we have to wonder exactly what is going on behind the scenes. Although we can't complain that one of the year's hottest devices (mostly for already having a low off-contract price) got even hotter with the price drop, there has to be some reason behind it. And because we can't just leave well enough alone, we might as well let our speculations out while we wait for the real reason to pop up.

Initially, my thoughts immediately went to a not-so-far-off Nexus 5 release. However, unlike most other devices that we are anticipating to see on the market, leaks and rumors of a Nexus 5 have been null. Whether it's because there really is no news regarding the device, or because the industry is already so busy with other upcoming devices and events that it would be almost pointless to throw a new Nexus into the mix, I don't know. What I do know is that I still consider that idea, or something like it, to be a front-running reason as to why the price was dropped.

 

A New Nexus?

I browse other tech forums and websites often, especially when big news like this hits our market. I wasn't surprised to see that I wasn't alone in thinking that this price drop was a clue in a new Nexus hitting the market sometime soon, but others had a different take on exactly which Nexus we would see hitting the market. Would we see a Nexus 5, or would it be something like we saw with the Nexus 7; something like a Nexus 4 Part II type of deal? It's been mentioned that naming a new Nexus the "Nexus 5" while keeping the screen size the same 4.7" wouldn't make any sense - the general consensus seems to be that if a device is going to be named the "Nexus 5" it should feature a 5" or larger screen, which might confuse people otherwise given that the Nexus line never really had followed a numerical naming system. Since the Nexus 7 came out with a "refreshed" model this year, I wouldn't be surprised to see the Nexus 4 do the same. A couple of tweaked specs and add in LTE and the device is pretty much exactly what everybody was hoping to see last year.

I feel like slashing the prices by $100 is going to get a lot of people to buy it, even if for petty reasons like me (i.e. "Just because," "I might need it later," "My dog wanted a smartphone," etc.) This isn't something we're offered every day, or really ever. Sure, there are plenty of decent Android devices on the market for this price or cheaper off-contract, but none from as reputable of a company as LG or Google themselves. It would seem like they're trying to get rid of the devices, and get rid of them fast. But for what?

 

Or Perhaps To Compete With Apple

The rumors and leaks for the "iPhone 5C" that many are expecting to see at the Apple event on September 10th are also starting to come into play, and it's something that I didn't really consider at first, but I'm entertaining the thought of it now. I'm not sure I believe this more than the new Nexus theory, but I suppose it has its fair points. Some people are speculating that the reasoning behind the price slash is to be able to compete with a product like Apple's rumored iPhone 5C, which is supposed to be a cheaper variant of the iPhone 5S. Now, we're still in the dark on just how cheap the 5C will be, but something tells me that even at full-price the device won't cost $199, or even $299 (maybe if we're lucky). But, perhaps having such a low price is what's supposed to drive people to purchase the Nexus 4.

All in all I think that the theory that this was only to compete with the iPhone 5C is a little far fetched, but I could see how it could motivate Google to cut the price now, even if we won't see a new Nexus for a few months.

 

Production Costs Were Cut

The last theory that I've come across on several websites is that people wonder if production costs to make the device went down. I find this to be the least likely scenario, mostly because I have a severe lack of trust in most companies and despite how "nice" they want to come across, these businesses are still businesses trying to make as big of a profit as they can. We already know that it costs substantially less money to construct the entirety of a smartphone than we end up paying in the end, and Google's Nexus line was the closest we were getting to a true cost as it was. No other phone has come along to really steal its thunder to make the price dip even lower. I'm not saying it wasn't the reason, but I'm highly skeptical about this theory.

I personally think it's a mix between the first two theories. I think they would have cut the prices shortly before releasing a new Nexus either way, but given that Apple is supposedly planning to release a cheap iPhone gives Google a reason to slash prices even earlier. But despite whatever situation really made Google decide to start selling the Nexus 4 starting at $199, I think we can all agree that it's a good thing it happened.

Readers, what are your theories on the matter? Do you think Google slashed prices in preparation for a new Nexus, to compete with the iPhone 5C, or perhaps just because production costs went down? What theories do you have? Share your thoughts with us in the comments below!

Images via Tested, Digital Trends

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