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Virtual network operator Ting just made a very odd product launch. On Monday, it began selling the Nexus 5 smartphone to its customers, but on its blog Ting implored its customers not to buy the phone through the company’s website. Instead, Ting is asking customers to buy it directly from Google(s goog) at the Play store.
Not only will Ting charge you more if you buy the phone from its online store ($445, compared to $349 through Google), it only offers the device in one of its three colors (black). You’re much better off just buying a $10 SIM card from Ting and then activating your Nexus 5 after Google ships it in in the mail.
The blog post shows the weird dynamics at work when it comes to the way that Google promotes its line of Android flagship devices. Ting says it’s actually selling the phone below cost even at $445, meaning it’s losing money on every sale. While other carriers are selling the LG-manufactured phone for around $150, they’re doing so through contract subsidies, making back the device’s costs through hidden charges in their monthly bills.
What this goes to show is that at $349, Google is pricing the Nexus 5 much lower than it should be. While we don’t know if it’s actually losing money on every smartphone sold, it’s certainly not making any money. Google is basically subsidizing the device.
Why? Sure, Google wants to get its Nexus devices into the hands of as many customers as possible, but it could do that through the carriers. By selling the device more cheaply on Google Play, it could be challenging the long-held notion in the U.S. that carriers are the source of our smartphones. The idea is that you should be able to buy your device and then pick the carrier you connect it to. Right now that choice is limited to Sprint(s s), T-Mobile(s tmus) and their mobile virtual network operators, and Ting just happens to be a Sprint MVNO.
Ting has no problem with that philosophy. Because the company doesn’t have contracts, it’s more interested in selling you a voice and data plan than an actual device. It started supporting the Nexus 5 back in November through SIM cards, and since then the Nexus has become one of the most popular devices on its network. Ting said it only started selling it directly because of customer demand, but as it points out, you can get a much better deal on the Nexus 5 elsewhere.