Google's (NASDAQ:GOOGL) Nexus smartphone lineup is a favorite among Android users. With the last phone in the series, the Nexus 4, sold out in Google's online store, all signs point to the company clearing out inventory for the launch of the next Nexus.
We have some very good guesses on what the Nexus 5 will look like. An internal service document presumably based on the phone leaked on Oct. 5 and was quickly taken down at LG's request. If the document was a hoax, it was exceedingly elaborate. The document also matches up with information from an FCC filing LG submitted for a new phone.
With reports putting a Nexus 5 unveiling as early as today, let's take a look at what the phone is set to offer, and why Google is offering Nexus phones to begin with.
A 'light' version of LG's flagship phone
The leaked and FCC documents both show a phone that's nearly identical to the LG G2, which is a flagship Android phone that was unveiled this August.
The Nexus 4 was a close cousin of LG's Optimus G smartphone, which was released last September. So the newest Nexus being based off a recent LG phone is just following last year's game plan. LG gets to manufacture additional phones, and Google gets to show off its "ideal" version of Android. The arrangement seems to be win-win, as both companies are in for another round.
The key selling feature was the price -- the phone started at just $299 off-contract for the 8 GB model. The off-contract part of that statement is the key. At its $299 price point, the Nexus was $350 less than the iPhone 5's starting off-contract price. The Galaxy S4 sells for $640 off-contract at AT&T.
Improvements over the Nexus 4
The Nexus 4 received extremely favorable reviews. However, the common theme across all reviews was that the phone featured one glaring omission: it lacked LTE. With LTE widely built out across American cities, this was a deal-breaker for many potential customers.
Leaked specs for the Nexus 5 show that it will fix this problem. LTE is onboard. In addition, some other notable tech specs are:
- A 4.95" display. The Nexus 4 screen measured 4.7" diagonally, so users get a bit more screen real estate.
- The processor is now a Snapdragon 800 from Qualcomm. The Nexus 4 featured the older S4 Pro processor from the company. Users get a bit more clock speed, and a better graphics processor. In short, it's a nice processor upgrade.
- The rear camera is 8 MP. That's slightly lower than the LG G2's 13 MP camera but the same as the Nexus' 4 rear camera.
- Storage is listed at 32 GB. That could be an interesting upgrade over the Nexus 4. That phone came with 8 GB at the entry level, and for another $50, users could get the 16 GB model.
- The phone is also supposed to come with the brand new Android 4.4, code-named KitKat. One of the biggest complaints about the LG G2 was extra software the company layered on Android. With Nexus models, users get Android as Google intended, free of any added software overlays added by smartphone manufacturers.
Should you buy the Nexus 5?
The Nexus 5 will surely be a great smartphone, especially for Android enthusiasts. Reports have the 16 GB model at $299 with the 32 GB model at $399, which leaves it priced similarly to last year's model.
Whether or not someone wants to buy the Nexus depends on a few factors. The most obvious is whether you're looking for a smartphone off-contract. In America, where AT&T, Verizon, and Sprint are the three largest providers and sell predominately to customers on contract, that might not be as large a concern. However, if you're not on a contract on any of those carriers or on T-Mobile or a pre-paid carrier, it's hard to find a phone that offers the high-end features of the Nexus 5 at comparable price.
What's in this for LG?
The other question is, why are LG and Google doing this? After all, Google owns Motorola, a company that just launched a different high-end Android phone named the Moto X. Likewise, LG is building a phone for Google that's sold at a fraction of the price of its comparable LG G2.
In LG's case, the Nexus 5 is selling to a different audience. The LG is being pushed by carriers to new phone buyers on contract while Nexus phones are predominately sold through Google on their Google Play store. The Nexus 5 likely cannibalizes LG G2 sales to a very limited extent. Also, LG could use the added revenue Google gives it for manufacturing the phone. While the company sits in third place in smartphone market share behind Samsung and Apple, it's a distant third with just 5.1% of the market last quarter.
What's in this for Google?
In Google's case, it's been pushing Nexus phones since before its Motorola launch. It's no secret that Google's Motorola acquisition has been rocky at best; it was the brain-child of former Android head Andy Rubin, who has since left the group. At the end of the day, Google is more interested in Motorola's patents and IP rather than its phone design expertise.
Which brings up the key issue that Nexus phones and tablets aren't about breaking sales records, it's about producing top-of-the-line phones to show off what Android can be at its best. Reports last year had Google assisting Motorola with its 'X' phone that was supposed to rival the best from Apple and Samsung. However, while the phone did end up launching to good reviews, it was far from great. The key idea here being, it looks as if Google still doesn't trust Motorola to produce a Nexus phone up to its standards.
Whether or not Google really needs to make Nexus phones is far from a certainty. Their Nexus tablets have found more traction and helped push Android forward in the space. Yet, the Nexus phones are just a bit player in phones. Also, popular phone models like the HTC One and Samsung Galaxy S4 now come with "Google Editions" that are Android without added software from the companies. So, the "pure" version of Android is already out in the wild.
Yet, Google seems bent on continuing Nexus. It's a relatively low-risk bet, and if you're a consumer looking for a smartphone without entering into a contract, it might be the best smartphone money can buy.
Eric Bleeker, CFA has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.