LG to ramp up production of Google's Nexus 4

Demand for the new Nexus 4 has exceeded Google's expectations, and now LG is ramping up production to keep up with demand. But how much of this demand is down to the low price of the handset?

Google is having a tough time keeping the Nexus 4 in stock, and once again handset manufacturer LG is pointing the finger of blame at Google for the shortages.

Speaking to French technology website Challenges, LG France's director of mobile communications Cathy Robin said that Google misjudged the potential demand for the device.

In the interview, Robin said that the supply issues are down to inaccurate sales forecasts by Google based on the previous sales history of Nexus handsets.

It should probably comes as little surprise that the Nexus 4 is a huge hit. It is a fantastic handset — large screen, powerful Qualcomm Snapdragon S4 Pro processor, and the latest Android 4.2 "Jelly Bean" operating system — at a very competitive price. It's pretty much everything that an Android user would want.

Price is particularly attractive when you compare it to other high-end handsets. An unlocked Nexus 4 will set you back $299, compared to around $750 for an unlocked Samsung Galaxy S III.

This huge difference in price would suggest that someone — more than likely Google — is heavily subsidizing the price of the handset in order that it gain traction, and that this is the reason why it is in such heavy demand, especially in Europe.

While competitive pricing is good for both Google — because it wants to increase Android market share — and consumers looking for a cheap handset, it's not so good for the wider Android industry. Outside of Samsung — a company that seems to have an iron grip on the Android market — vendors hare having a hard time carving out a viable market. Profit margins are already razor thin, and Google throwing money behind its own handset will do nothing to help the other players.

Google's willingness to lose money in order to give its handset an advantage over the competition should make other players nervous. Google has huge amounts of cash at its disposal and, unlike other players, doesn't have to rely on the hardware to turn a profit.

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