[Discuss] The Windows tax

[richard.pieri at gmail.com (Rich Pieri)]

On Fri, 08 Mar 2013 09:37:44 -0500
Jerry Feldman <gaf at blu.org> wrote:

> Price is a function of the market, not cost. (Econ 101). LG and

Which is why I picked two effectively identical pieces of hardware.
Identical hardware, identical manufacturing and materials cost. That
leaves market as the differentiating factor.

When selling a product you need to actually sell something in order to
make a profit. Which leads to the question: what product is Google
really selling? Is it telco service? No. Nexus 4 is no contract,
carrier unlocked out of the box so there's no kickback associated with
a service plan. Is it the hardware itself? Doubtful. The retail markup
would be much higher if the bulk of Google's profits came from handset
sales. What other sources of revenue does Google have? Advertising is
one, but that's pretty closely linked to the search engine business
which in practice doesn't have much direct impact on Android devices.
The other is Google Play, Google's analogue to Apple's App Store.

Doesn't take John M. Keynes to see Google trying to do Apple one better
with a lower-priced handset. You can see a trend over the Nexus line.
HTC Incredible and the identical Nexus One were the same price without
contract. The two Samsung Nexus phones had more divergent prices. And
now Nexus 4 vs Optimus G have an even wider retail cost difference. It
does appear that Google is taking a retail price hit in exchange for
market share and Play sales.

-- 
Rich P.