Andy Rubin is pretty smart; he has to be if Google trusts him to lead its Android business. And Android’s 75% quarterly market share would confirm this. That’s why it seemed LTE 4G mobile data had obviously been omitted from the Nexus introduction, especially when Apple finally added this capability with the iPhone 5 announcement. When a smart person (Rubin) and a smart company (Google) do something unexpected, it's usually for an insightful and interesting reason.
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Daryl Schoolar, principal analyst for network infrastructure at Ovum, was "at first surprised that Google would announce the Nexus 4 flag ship device without LTE." But to Schoolar, Google’s reasons became clear. "If the goal is to build a lowest common denominator, mobile device that works everywhere at the lowest cost HSPA is the right choice for mobile data rather than LTE." LTE would add cost and complexity to distributing a single high-volume, low-cost unlocked device. "Apple sells three models of iPhone 5 to be compatible with all the LTE networks that operate at different frequencies. Each iPhone is locked to a carrier’s mobile network," added Schoolar.
HSPA is available almost everywhere, but LTE is largely deployed in metropolitan areas. The greater population is distributed in metropolitan areas, but LTE is not a sole mobile data solution because most people travel outside the LTE coverage area. If a mobile device is to have only one data service, it should be HSPA.
A good example that explains this is the AT&T LTE and 4G/3G/2G coverage map that denotes that an HSPA mobile device will operate in the predominant light and dark blue areas of the map, whereas an LTE-only device, if one existed, would only work in the metropolitan areas denoted by orange dots.
The Nexus 4 is unlocked, meaning it will work on any HSPA network. According to Ovum there are 232 HSPA carrier networks worldwide. This compares to the 110 LTE networks worldwide that require specific models of each mobile device.
The Nexus 4 is also different in the way it is bought online from the Google Play Store. The 8 GB Nexus 4 can be purchased for $299 unsubsidized by a carrier contract. This compares to $100 to $200 purchase price for competitive smartphones with a two-year contract commitment and $500 to $700 purchase price without a contract, or unsubsidized by the carrier.
"The $299 price point was met with system design choices relying on HSPA and limited memory at 8GB," said Wayne Lam, senior analyst at IHS Electronics & Media. Lam explained that "designing for HSPA instead of the latest LTE design allows Google and LG to take advantage of more mature and hence lower-cost digital baseband and RF componentry - reducing overall hardware cost. Also, by not including a 4G radio, they are able to avoid the higher licensing fees associated with LTE technology."
The Nexus 4 manufacturer, LG, is second in Android market share to Samsung and is motivated to shave margins on the Nexus 4 because of the high marketing value of the association with the Google brand. Google also needed to diversify its Android partnerships so that Google’s "Nexus" name did not become more strongly associated with the Samsung brand than the Google brand.
A future Nexus phone will no doubt have LTE, but probably after the component costs become less expensive and the interoperability between networks improves. Google’s goal is to dominate mobile device market share by driving down the cost of production and enhancing Android to be as good as or better than the competition. Based on recent IDC reports, it’s apparent at 75% of smartphone shipments; it’s accomplishing its goals.