[Nexus 4 General] cvfl:
I will speak only from my experience as an American who worked for a major mobile device manufacturer and traveled internationally. I have no specific personal knowledge to the details of the LG/Google relationship. Sigh, here we go...

The burdened cost of this device is likely in the $200USD range (that means materials+labor+distribution to the customer=Google). LG is likely selling this device to Google in the $230USD range. Most people would scratch their head to ask why would LG do that? Simple - low distribution costs - shipping to a half dozen distribution points globally; and 0 marketing subsidy requirements - as an OEM phone they don't have to offer backend incentives to carriers and retailers to market the thing. Get the volume, and crank them out - they don't care where they go. But they underestimated volume most likely because of bad forecast numbers from their customer.

Google is pushing devices into 2 channels: $300USD direct and let's say $350 to carrier. Why not $350 everywhere? Because the carriers are a royal PITA. Buggy software to add, additional variants, special packaging, marketing discussions, BLAH BLAH BLAH. What does Google want? Make their clean $70 per device, and have you sit squarely in front of the Play Store to buy software. They made money to get service customers. Rule #1 if you can make money AND get market share you do it. And BTW - Google's distribution costs are $0, because they have contracted all of it out to UPS and other small package logistics compaines - and every phone sold on Play gets billed that freight - you are delusional if you think it's actually costing $14 to ship me 2 phones. The problem was bad forecasting and lack of scalable control of their supply chain - bad forecast in + outsourced customer service + fragile communication with logistics + shaky online sales solution = trouble in paradise. This is not unique to Google, I lived this nightmare for a long long time. This is coincidentally also the recipe to lose market share in the long term.

The real money comes from the software market. Apple knows this - that's why they spend so much $ on marketing to make people think it's a premium product, and also why they pushed "there's an app for that". It's ultimately what sucked the life out of Nokia with the crappy Ovi attempt (and arrogance to what country level customers really wanted). Microsoft knows it, and that's why they are trying so hard to get on so many devices and being careful not to get on crappy devices. Everybody does the low end phones, because they want to get their brand in front of as many people as possible in emerging markets - but they don't like it AT ALL.

US carriers pay the $350 gladly and sell it to their customers on contract - this is the easy one to explain because everyone sees what happens. Carriers convince you the device is WORTH $500, so you think you are getting a deal at $350. Leave your contract, get $200 ETF. Stay on contract and pay +/- $12 month x 24 months in subsidy. Don't believe me? What's the price difference between pre & post paid? If you think carriers don't want to make $200 off you in hardware every couple years, and keep you on their $60 service..... Well, you just don't know their business model.

Why oh why does this madness happen? Americans + subsidy markets for the most part are lazy consumers - whoever sells something at a reasonable price (not best) and doesn't appear to be directly bending people over gets the business. Case in point: WalMart. Why buy your device from TMO/AT&T? No action on the consumer part - they just walk in the store and get it. TMO/AT&T tells people it's a $500 device and you are getting a $150 "upgrade" to stay on contract. Sheeple shrug their shoulders and stay on TMO/AT&T, oblivious they just got played by marketing/retention. But we Americans are starting to figure this out, albeit slowly. Both the previous reasons are why postpaid is increasing like it is - it's available in non-carrier retail (laziness) and getting smart to subsidy market (perceiving boning). Oh, and all these people have no credit and no job, but HAVE to have a mobile phone, so they have to be post-paid.

We can argue all day long about who gets what $5. But the model itself is what it is at the moment. We the few & proud try and buy our devices direct and un-subsidized. I really hope we can someday get the level of service in the US that Europe has: cheap, high-speed networks, multi-SIM solutions that are truly customer centric to keep loyalty high...

Great, now I'm depressed. :cowboy:

---------- Post added at 08:53 AM ---------- Previous post was at 08:34 AM ----------

I guess I should also clarify some things about different manufacturers:

Samsung, LG, Huawei etc are resigned to all just being device manufacturers - they don't sell software, so they have to make their money on volume.

It could be said because of the relationship with Microsoft, Nokia still is somewhat trying to keep both balls in the air. Nokia is trying to recover their volume, the MS App store prints cash and Gates slides small piles across the table to Nokia.

Google is not and does not want to be viewed as a device manufacturer. Why? Phones have moved to just being another commodity. Their job is to keep your eyeballs on their software market. This is a great position to be in - get everyone else to R&D and make your products, and wield your market share like a sword.

Apple is a cult. They know they're a cult. You know they're a cult. They know you know they're a cult. But you know, they are driving change in the US market. They said FU for the most part to the carrier subsidies, protect their product and have a carefully planned roadmap. Only problem i see here is their product innovation is slowing down. Once people stop drinking the Apple juice, they'll start to find that other purpose built beverages fit the bill nicely.

Multiple device/SIM ownership ensues. Hopefully we get the kind of climate other parts of the world now see.