Why Google Can't Sell Expensive Products

Google announced its first phone and many people wondered why it's as expensive as an iPhone. Nexus phones were sometimes inexpensive (Nexus 4: $299, Nexus 5: $349, Nexus 5X: $379) and sometimes more expensive (Nexus One: $530, Nexus 6: $649, Nexus 6P: $599). Now the 5-inch Pixel costs $649 in the US, while the 5.5-inch Pixel XL costs $769, which is more than any other Nexus phone.

Obviously, Google's pricing was more aggressive when it wanted to sell more products and less aggressive when sales numbers mattered less. The truth is that Google only managed to sell products in high volumes if the price was low enough to make them good value. Chromecast was successful because it offered a lot of value for the money. Nexus 5 was a flagship phone at half the price, so millions of people bought it. Nexus 7 was good enough for $199, but Google's bigger tablets were more expensive and their flaws were more striking.

Google is a "value" brand. Most people associate Google with free ad-supported online services that offer great features. There's no paid Google software for consumers, as Google only sells digital content and subscription services (storage, music). Google is not a lifestyle or luxury brand, so people don't expect to pay much for Google products.

There's a lot of risk associated with Google products, since Google doesn't stand behind them all the time. Some of them are experiments, others are quickly discontinued and forgotten. I still remember that Google stopped selling Nexus One only 6 months after the launch or when Logitech's CEO said back in 2011 that Google TV was a huge and costly mistake. Android One was a flop, Google Play Edition failed, Motorola was acquired by Google and later sold to Lenovo.

Google's commitment issues, its high appetite for releasing beta products, its lack of planning and foresight - all of these problems alienate consumers and make them think twice before buying a Google product. Premium brands are all about image, trust, credibility, heritage.