With T-Mobile getting ready to offer the Nexus 5, some are beginning to question their starting price of $450. Whether you pay a monthly fee for the phone or buy it outright, it’s a premium over the Play Store’s pricing structure. T-Mobile is now countering that they do not profit from the device, and insinuate that Google is subsidizing the cost for consumers who buy direct.
When questioned about their pricing, a T-Mobile representative tells CNET that they pay the full cost of the phone. They went on to say they do not profit form the device, which begs some questions. Are we getting a deal from Google, or is T-Mobile just not being clear on their profitability as it relates to the Nexus 5?
Google has yet to comment on the report, but it’s not immediately clear just why they would subsidize the Nexus 5. Google has long maintained they don’t necessarily profit from the device, but a $100 subsidy is one we can’t see being a choice they’d make. Of course, we enjoy the pricing of the Nexus devices, but such a large subsidy seems like a terrible idea, as Google doesn’t have an avenue for making that difference up via rate plans or the like.
Of course, A Nexus device — like any other Android device, save for Amazon’s offerings — ties us into the Play Store. Even with that, Google would then need us to spend quite a bit more than that for them to make up their subsidy via the percentage they get from app and media sales. With the proliferation of free Android apps, and the high cost of media compared to other sources, it just doesn’t make sense. We’ll keep you updated as we learn more.