Ben Wood, Mobile Analyst with research firm CCS Insight, explaining the financial model for this deal, said, “Although it is unlikely Google would sell the Nexus 5 at a straight loss, it is highly likely that it would sell it at around cost or with very little margin.” This is a big reason why the Nexus 5 has different prices on different channels. And the same could be the case in India.
Wood added, “Google will only sell around 1-2 million Nexus 5s, but they will be bought by key people; Android evangelists, developers and influencers. They will spread the Android brand.” The rest of the stock will be sold by LG through the wholesale retail channel at a premium, and the Korean company would reap higher margins from these sales.
If indeed Google is releasing the Nexus 5 in a limited capacity through the Play Store in India, then we can expect a similar pricing disparity in India too, with the wholesale retail market selling the phone for a higher price than the Play Store. We have already seen an online listing for the Nexus 5, which shows a higher price than the Play Store’s Rs 28,999 tag. This retailer is selling the Nexus 5 in India for Rs 29,990.
Of course, this is not the first time that a Nexus smartphone has two different prices for different retail channels. Ben Wood, Mobile Analyst with research firm CCS Insight, said “We saw the same thing for the Nexus 4. With the Nexus line, Google always goes for very aggressive pricing with its manufacturing partner.” For LG, Google’s current manufacturing partner, the Nexus programme helps a great deal to put its smartphone line-up in the limelight, which was evident from the rise in its smartphone market share since the Nexus 4’s launch.