54910-nexus5Look, don’t take this the wrong way as I’m not suggesting buying the Nexus 5 from your carrier of choice is a bad move, except that’s exactly what I’m saying. The thing is, it isn’t even the carriers fault as they are simply passing on their cost of the Nexus 5 purchase from LG/Google directly to you. Sprint and T-Mobile have both confirmed that their cost of the Nexus 5 is $450 indicating that Google is subsidizing their pricing of the Nexus 5 via the Play Store. Just like last year’s Nexus 4. 

Yes, there is an argument to be made that not having to fork over the entire up-front cost is something that could appeal to many potential Nexus 5 buyers. However, in the long run I’d rather see customers saving the extra $100 and putting it toward apps, accessories or paying the electric bill. It’s likely Google is taking the $100 loss in the hopes of pushing customers into the Play Store where they will grab apps, books, movies, magazines and all the other things Google will make a profit on. More Nexus users means more Google Maps and search use, more money, more money…

9to5-image 2013-11-10 at 9.47.41 AM[Ed. note: If you want to save even more money, T-Mobile still offers a super secret Web only $30/month pre-paid plan (meaning little-no taxes) that works great with your Nexus 5.  You have to scroll to the bottom of T-Mobile’s plans page to find it—->.  It includes unlimited data (throttled at 5GB), unlimited texts and a sparse 100 minutes of talk time.  If you aren’t a talker, you are looking at $360 for a year of unlimited data + $350 for the best Android phone (under $60/month total) out there!]

Realistically, this is the same discussion we saw play out with the release of the Nexus 4 on T-Mobile when they charged a higher price tag than Google’s own Play Store. During that Nexus release I also advocated purchasing from the Play Store when I solely covered the T-Mobile beat and instantly recognized that T-Mobile was just passing on their cost. Now, I recognize that T-Mobile isn’t gouging us or setting their pricing so high as to make sure they profited on the sale of the hardware.

The Uncarrier was simply breaking even on the handset itself. T-Mobile wins by having you purchase the device through them and thereby having you as a paying customer rather than buying through the Play Store and risking you ending up on Sprint or AT&T. Like any good competitor, T-Mobile is just trying to keep business in-house and offer a lower up-front cost they hope appeals to a percentage of Nexus 5 buyers. It’s a sound strategy and I absolutely see their reasoning in implementing it, as I do with Sprint but that doesn’t mean I wouldn’t for a second suggest that if your heart is truly set on the Nexus 5…just buy it from the Play Store.

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