You'll Pay a Lot More for an Unlocked Nexus 6 Smartphone

$649 for 32 GB Nexus 6, while subsidized carrier prices are expected to be much lower

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The Nexus 6 smartphone.

Google's new Nexus 6 smartphone will start at $649, unlocked, when pre-orders begin on Oct. 29. The price is nearly double the $349 starting price charged for the Nexus 5 a year ago.

Google didn't elaborate on the price increase after announcing the Nexus 6 on Wednesday, but several analysts said Google may be intending to push the Nexus as a premium brand that can compete with the iPhone 6 and other high-end phones.

Google originally developed Android to be inclusive and global, and indeed, it is the world's largest OS by far. The company developed the Nexus line in 2010 to show Android phone manufacturers, and the public, how a pure Android phone could look and feel without the added features and bloatware installed by phone makers.

Meanwhile, the four national carriers are expected to sell the Nexus 6 with a subsidized price of as low as $200 with a two-year contract, and separate pricing for installment plans. AT&T will be a Nexus provider for the first time, and Verizon Wireless will carry the phone despite a spotty history with the Nexus line.

Such a carrier push to sell Nexus 6 phones with a subsidy seems to indicate that Google is intent on spreading wider adoption of its pure Nexus line that it so far hasn't achieved. Google has long described Android as an operating system for all, but Google also wants to promote a more refined Android device, which it is trying to do with its Nexus line.

The $649 Nexus 6, which will run Android 5.0 Lollipop with support for 64-bit architecture, is a better phone than the $349 Nexus 5 that runs Android 4.4 KitKat. Nexus 6 also starts with 32 GB storage, double the capacity of its predecessor the Nexus 5. (A 64 GB Nexus 6 will run $699 unlocked on Google Play.)

But all the enhancements in the new Nexus 6, including its 5.96-in. Quad HD display and Snapdragon 805 quad-core processor, still don't fully account for the 86% increase in starting price for the unlocked model, analysts said.

Sundar Pichai, senior vice president of Android at Google, noted in a blog post that wireless carriers will offer the Nexus 6 on monthly contracts or installment plans. A number of industry sources predicted the two-year contract price will start at $200, a common industry price for high-end smartphones, including the new iPhone 6.

The four major carriers, Google and Motorola, which is the  Nexus 6 manufacturer,  all refused to discuss the prices that carriers will charge. They also would not disclose the November release date. However, they did play up the high-quality features of the new smartphone, such as its 13-megapixel rear camera and a 2-megapixel front camera. One big advantage being advertised is the ability to boost the phone's 3220 mAh battery by six hours in only 15 minutes by using a Motorola Turbo Charger.

Some analysts and bloggers have said that Google is deliberately driving more customers to the lower, subsidized carrier sales by selling the unlocked version on Google Play for $649. Others disagree.

"It's a little farfetched to think Google is pushing Nexus 6 buyers to carriers," said Kevin Burden, an analyst at Strategy Analytics. More likely, he said, is that Google has bumped up its price for Nexus 6 out of a historic industry practice of bumping up prices for premium phones that haven't sold well.

"You tend not to see these price jumps with popular phones, and when you do, it's on phones not selling well," Burden added. He said both HTC and Sony have bumped up prices on previous phone models to "imply a premium that's more of a guise than anything."

Burden said that phone manufacturers, including Google through Motorola, must spend time and money to build an effective brand such as the Nexus line. "The cost of building a brand is high," he said. "Not only phones sell, but brands sell, and you've got to deliver that 'premium' belief to users. It's one tactic to use and not everybody has been successful with it. Raising prices might also be about recouping costs on a poor selling phone line."

Nexus smartphones first started selling in January 2010 with the Nexus One, made by HTC and running Android 2.2 Froyo. There have been five models since then from different phone makers, including the Nexus 6.

Rob Enderle, an analyst at Enderle Group, said the first Nexus phone was portrayed as a premium device. "With Nexus 6, Google is moving Nexus back into a technology leadership product," he said. "This is their closest effort to the iPhone and this Nexus 6 showcases a return to that focus."

Enderle also argued that Google is using the Nexus 6 to counter Samsung and its top-selling Android line of Galaxy smartphones. "Samsung has basically owned the Android market for phones, so think of Nexus 6 as Google's attempt to pull control of the Android experience back from Samsung."

Jack Gold, an analyst at J. Gold Associates, said pricing strategies for smartphones can be designed to serve many purposes. "I think Google is saying with the $649 price that it won't try to compete directly with its good partners making Android phones in the $400 and lower space, and then position Nexus 6 as a premium device," he said. "This keeps the partners happy."

As for the potential $200 price on contract from carriers, Gold added, "That $200 is probably more about the need to be competitive with Apple devices. The individual carrier, and Google, want to at least make them competitive to see how well they sell."

There are, indeed, some devoted Nexus smartphone users, but from a marketing and pricing standpoint, it's likely that the Nexus 6 will be another experiment for Google.

This story, "You'll Pay a Lot More for an Unlocked Nexus 6 Smartphone" was originally published by Computerworld.

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