Google Pre-Empts Cheap iPhone With Nexus Price Cut

Ahead of the expected unveiling of Apple's (NASDAQ: AAPL  ) low-cost iPhone, Google (NASDAQ: GOOGL  ) has cut the price of its Nexus 4 by $100. Now priced at $199, the Nexus 4 is -- dollar for dollar -- the best-valued smartphone on the market.

Given that Apple's new cheaper iPhone model is estimated to cost around $350-$400, Google's Nexus 4 could, in theory, pose a threat.

Google's Nexus 4 hasn't sold well
But I doubt it. For starters, the Nexus 4 hasn't sold particularly well. Exact sales data has never been released, but during the phone's first three months on the market, it was estimated to have sold fewer than 400,000 units. In May, reports indicated that the figure had jumped to 3 million, but that's still a far cry from its competition.

Samsung's (NASDAQOTH: SSNLF  ) latest flagship phone, the Galaxy S4, sold 20 million units within three months of its launch. That means that it outsold the Nexus 4 by a factor of 50. Granted, the S4 is technologically superior, with features that the Nexus 4 lacks (such as LTE capability), but such a huge disparity suggests other factors may be at work.

One notable fact is that carriers (other than T-Mobile) don't actually sell the Nexus 4. Instead, customers have to go to go to Google's website and order it, then have it activated by their provider. Moreover, the Nexus 4 has received little advertising, while Samsung spends tens of millions of dollars promoting its Galaxy devices.

It's unlikely that Apple's low-cost iPhone will suffer a similarly weak performance. Consumers are already accustomed to buying iPhones directly through Apple at its retail stores, and carriers also distribute the phone. Additionally, part of the iPhone's appeal is iOS, which is exclusive to Apple products, unlike Android, which stretches across many OEMs.

Is another Nexus phone coming?
Apple doesn't run many sales, but other tech companies do. Frequently, these take the form of discounted electronics ahead of the release of a new model. The Nexus 4's price cut, then, could signal the impending launch of the next Nexus phone. Like the Nexus 4, it shouldn't be expected to sell particularly well, yet it could portend something far more substantial.

From a strategic perspective, the point of Google's Nexus devices is to offer consumers a "pure" version of Android. Most Android OEMs put a modified version of the operating system on their devices. Samsung, for example, uses a version of Android known as TouchWiz.

Last year, the release of the Nexus 4 coincided with Android 4.2. If the latest Nexus phone is right around the corner, could the next version of Android be coming with it?

Ultimately, that could be far more important. Google's last major update, Android 4.1, was a massive improvement to the operating system. It included, among other things, a feature called Project Butter, which significantly increased the operating system's performance, to the point where some tech reviewers dubbed it on par with Apple's iOS. Android 5.0 could bring similar improvements.

Samsung also plans to pre-empt Apple
But if the point of the Nexus 4's price cut was to pre-empt Apple, it wasn't the only company with that idea. Samsung also intends to get out ahead of Apple with an announcement of its own. On Sept. 4, Samsung is expected to unveil two new devices.

The first of which will be the Galaxy Note 3, an update to its popular lineup of phablet smartphones. The second will be the Galaxy Gear, Samsung's foray into the world of smart watches.

The Note 3 is unlikely to significantly affect the coverage surrounding Apple's next iPhone, but the Galaxy Gear could. Although Sony already released a smart watch last year (and plans to roll out its second next month), the Japanese electronics giant just hasn't received the same level of media attention as Samsung and Apple.

The discussion surrounding the Galaxy Gear should be intense. For many consumers, this will likely be the first smart watch they ever consider purchasing. If Apple's next iPhone does not come equipped with radical new features, the perception of Apple as a company could be damaged for a time. It is not hard to imagine Apple's rehashed phone being juxtaposed with Samsung's radical new watch, as pundits argue that Apple has ceded its innovative edge to Samsung.

A crucial month for mobile
Overall, September is setting up to be a crucial month for mobile technology. In addition to Apple's new iPhones, consumers should also see a new Samsung Note and a smart watch. And consumers might soon be seeing a new Nexus phone, one equipped with the next version of Android.

Although it's popular to frame the situation as a "war" between the companies, all three could benefit from the new devices. Apple's low-cost iPhone, even if it's more expensive than the Nexus, should still outsell it. Samsung's watch, as a whole new device category, could give the company a lot of favorable buzz. And while a new Nexus phone might not be a hot seller, a new version of Android could help Google cement its mobile operating-system dominance.

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