When Google (NASDAQ: GOOG) (NASDAQ: GOOGL) last year released the latest generation phone of its Nexus line -- the Nexus 6 -- it was widely considered a departure from previous units. For one thing, the model was more expensive: The Nexus 6 came to market with an introductory off-contract price of $649, while its predecessor, the Nexus 5, cost $349 at its lowest price point.
However, the price wasn't the biggest departure from Google's previous strategy. After Google designed a near-5-inch model with the Nexus 5, the Nexus 6 boasted a nearly 6-inch screen. And while there is undoubtedly an audience looking for large, expensive phablets, many of those who initially saw value with Google's pre-Nexus 6 midrange strategy questioned the phone line's direction. And it appeared their concerns were valid. During a quarterly conference call, management conceded that Nexus sales had fallen, as the Nexus 6 had to compete with high-end models from Apple and Samsung.
More recently, however, it seems Google is rethinking its strategy -- at least somewhat. Earlier reports had Google looking to bring two Nexus smartphone models to market in its next release, with Huawei working on the larger Nexus 6 replacement, replacing Motorola as the manufacturer, with LG reclaiming its spot as the Nexus 5 OEM.
If the newest report from Geek Snack is correct, there was a reason LG won the contract, as the smaller next-generation Google Nexus will look and feel a lot like the old Nexus 5 and will actually be named the Nexus 5, presumably using the nomenclature to denote screen size rather than iteration/succession. If so, and Google returns to its pre-Nexus 6 pricing strategy, it could reverse the company's flagging smartphone sales.
The Nexus 5 had a compelling value proposition
The Nexus 5 sold more briskly than its next-generation unit because it fit a nice niche in an underserved phone market -- the midrange -- while providing solid value for the money. Specifically, the Nexus 5 brought top-notch processing, solid design, and Google's brand cachet to prospective smartphone users for a relatively inexpensive price. If the reports are correct, the Nexus 5 refresh is bringing a solid computing system to this fall's unit.
According to Geek Snack, which quoted insiders familiar with the matter, the Nexus 5 will most likely include Qualcomm's Snapdragon 810, which is the same chip that is being widely reported to be used in the larger, more-expensive Nexus 6 refresh. And although a few reports have pointed to Qualcomm's flagship chip overheating, it is widely accepted that Qualcomm makes some of the best mobile chips in the industry. In addition, the phone is reported to pack 3GB of gaming-friendly RAM, to be available in 64GB and 128GB versions, and to continue the Nexus' traditional of offering wireless charging.
It does appear the screen size will increase. From the reports, it seems Google will push up from the previous version's 4.95-inch display to a 5.3-inch screen. If so, this makes the screen larger than those of even its high-end counterparts, the iPhone 6 (4.7-inches) and Samsung's Galaxy S6 (5.1-inches). While the price is still unknown, signs point toward Google focusing on the high end with its larger unit and the midrange with the Nexus 5 refresh.
I'm sure there are a few old Nexus 5 fans who are happy to hear the company is planning a refresh.
Jamal Carnette owns shares of Apple, which The Motley Fool also owns and recommends. The Motley Fool also recommends Google (A shares), and Google (C shares). The Motley Fool also owns Google (A shares), and Google (C shares). 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.