Yesterday’s opening of Google’s office in Manila sent optimistic ripples of rumors through the tech scene. Aside from the possibility to be able to work with one of the most important companies in the technology world today, the topic of conversation inevitably drifted off to possibly cheaper Nexus devices being sold here.
Unfortunately, if you were envisioning an era of $300 Nexus 4 devices like in the US, we have bad news for you. Google’s prese
nce in the Philippines doesn’t mean much in the device side of things until a few other, more important things happen first.
First off, you need to understand why Google’s Nexus series of devices are sold cheaper in the states. We’ve managed to confirm that Google subsidizes the cost of the device heavily, to the point that the company almost makes no profit out of them. Google only makes $15 on the sale of the cheapest Nexus 7 variant, for example. $15 is peanuts compared to the profits that other manufacturers make on their devices – Apple for example, typically makes $354 on every iPad (32GB with LTE) sold. Something else is up here.
What Google is absorbing in hardware profit sales, it’s gaining in install base. The reason why Google isn’t too worried about hardware profits is the Play Store. While the Play Store is just a portal for us Filipinos to get apps, it’s quite a different beast in territories where Google is subsidizing devices. You can buy movies, books, games, music and TV shows on the Play Store in those territories, and that’s where Google recoups their investment in the hardware side. If the company can get more Android devices out in the market at a cheaper price point than its partners, so much the better. A higher install base means that there’s more people using your ecosystem to enjoy the content they want, and to do that they will have to go through your store to get it.
So, before we see cheaper, Google subsidized Nexus devices out here, we will need to see Google Play open up first. Unfortunately, you won’t be seeing that anytime soon – it took iTunes a long, long time for it to officially open to the Asian market, probably because of IP and piracy concerns. Licensing deals and agreements for movies, TV shows, music and books takes ages to finalize. Google will also need to open up Google Play to allow local content creators to charge for their wares – we heard during yesterday’s event that local Android developers are not able to charge users for their apps – almost all (if not all) locally made apps are free.
By now you’re probably thinking what impact Google’s opening of their Manila office is. Well, from what we gather, Google’s looking to do an ad grab, and a lot of the local Google people we met yesterday were sales executives. Google’s looking to strengthening their Google Adwords program to get local ad agencies and brands to advertise with them. It’s their core competency after all, and once everything is said and done – Google is still a business, and this is how they earn money.