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Google Nexus Priced To Bite Into Apple's Low End

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Nexus S (Photo credit: Wikipedia)

In the middle of the news surrounding hurricane Sandy, the big news from Google (GOOG) seems to have been lost.  With the introduction of Nexus 4, Google has pulled off a big price coup.

An unlocked version of Nexus 4 is priced at $299, a remarkably low price for a phone of this quality.  An unlocked 16 GB Nexus 4 is priced at $349 compared to a similar iPhone 5 which is priced at $649.99 unlocked without a contract.

Setting aside personal preferences for Apple or Android, both phones are roughly equal for most practical purposes.

Display

Nexus 4 is a massive 4.7 inch device offering 1280 x 768 pixel resolution and 320 pixels-per-inch (ppi) for clear text and sharp images.  The phone uses Gorilla Glass 2 from Corning (GLW).  This offers scratch and crack resistance. By comparison, iPhone 5 has a 4 inch screen, resolution of 1136 x 640, which is not full HD and offers a ppi of 326.

Processing Power

Nexus 4 uses quad-core Qualcomm (QCOM) APQ8064 Snapdragon S4 Pro processor running at 1.5 GHz and 2 GB ram. In comparison, iPhone uses dual-core A6 processor running at 1.2 GHz and comes with only 1 GB ram.

Storage

Nexus 4 offers only 8 GB or 16 GB models. The iPhone offers 16 GB, 32 GB and 64 GB models.

Nexus Camera

The Nexus 4 offers 8 MP rear camera which shoots full HD video.  There is also a 1.3 MP front camera that shoots at 720p. iPhone 5 has similar camera specs but according to some evaluations takes better pictures.

Operating System

Nexus 4 runs on Android 4.2 Jelly Bean operating system. iPhone 5 runs on iOS 6. In most respects, both operating systems are comparable.  However, iOS 6 seems to be favored by those who like simplicity and Jelly Bean seems to be favored by those who like more customization.

Lack Of LTE

LTE, or Long Term Evolution, is the new 4G network standard.  Nexus 4 does not support it.  This will be a definite drawback for users who want the fastest network. Apple iPhone provides full 4G LTE support.

Investment Implications

In the short run, Nexus 4 is not much of a threat to iPhone as Google has a history of stumbling in the marketing of its Nexus phones.   As of this writing, there is no evidence that Google has gotten better at marketing.  In absence of good marketing, Nexus 4 may simply get lost among a number of new devices being introduced including those based on Microsoft Windows 8 such as Nokia Lumia 920.

Considering that Apple derives about 70% of its profits from iPhones and enjoys hefty gross margins, the fact that Google can bring to the market a somewhat comparable phone at about half the price shows that risks in Apple stock price are generally under appreciated.

About Me: I am an engineer and nuclear physicist by background. I founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the chief investment officer at The Arora Report, which publishes four newsletters to help investors profit from change. Write me: Nigam@TheAroraReport.com.  Follow me here and get email notification when I publish a new article.

Full disclosure: Subscribers to The Arora Report are long Apple from $131 and have taken partial profits at $360, $525, $629, $568 and $610.