Two different approaches
Freemium vs. Premium
Apple always had a premium status. They market their devices as top of the bill and that comes with a (in my opinion) pretty high price. But hey, it seems to work! People are waiting in line to get their hands on that newest iPhone or iPad mini.
On the other hand you’ve freemium, kinda what Google does. They provide services for free but you pay with your data. For some that might be not done (bla bla Privacy) but keep in mind Google is mostly transparent in what it does! To me Google wants to get as near as possible to freemium with their Nexus devices. A Nexus 7 only costs $199 and the new Nexus 4 will be available for around $349.
All Nexus devices have amazing specs, similar to Apple’s gadgets but at a far lower price it seems. So basically Google doesn’t need a big profit margin on their devices compared to Apple. It’s using parts that are already manufactured for other flagship phone, this time from the LG Optimus. I think that’s saving them some money on R&D and parts are probably cheaper too as they can purchase them in larger amounts.
Creating a perception
They also create a different perception with their models. Apple makes you think you have the best device ever and none other can compare to it. This is it, competition can pack their bags, they won’t make it.
Google does it a little differently. They want to make you think you are the person that’s down to earth and just wants a top of the bill phone for a cheap price. A device you can control as you like with lot’s of free stuff. You only have to give up your data to Google for which you’ll get even better services back.
I wonder which approach will work out the best in the end. Is it Apple’s Premium or Google’s freemium?