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Nexus 4 Price Cut Paves Way For Growth

NEW YORK ( TheStreet) -- Google (GOOG - Get Report) looks like it's really getting serious about generating more hardware revenue, as it cuts the price of the Nexus 4 to make it more competitive with offerings from Samsung and Apple (AAPL).

In perhaps an ironic move, Google posted a message to Twitter that it would be cutting the price of the phone to $199 in several different markets. Google included the US, Australia, Canada, Germany, Spain, Korea, and the UK in the price cut.

The 8 GB model now runs $199 (down from $299), and the 16 GB model will cost $249. These prices make the Nexus 4 comparable to the iPhone 5 and Samsung Galaxy 4, though those phones and prices come with carrier conditions and subsidies, whereas the Nexus 4 does not.

Google has been serious about boosting hardware revenue as it looks to expand into other businesses outside of its core search and advertising segments. Though Google missed earnings estimates last quarter as costs-per-click (CPC), a key advertising metric, continued to be weak, the company generated $1.05 billion in Other Revenue, which includes hardware sales. That figure rose 138% year over year, so it's clear that Google is increasingly focused on building this part of the business.

Motorola Mobility accounted for $998 million in revenue last quarter.

Google does not break down how many smartphones or tablets it sells each quarter, as Apple does, but the company noted continued momentum in hardware during its second-quarter earnings call . "[W]e continue to see great momentum across Chromebook's and mobile devices such as our Nexus program," Google's Nikesh Arora said on the call. CEO Larry Page furthered those comments, saying, "I think we've been an early innovator in smartphones and we've been really excited about starting Android when no one really thought it was going to be interesting."

The Nexus 4 has Qualcomm's (QCOM) Snapdragon S4 Pro CPU, a 4.7" screen, wireless charging, NFC capabilities, Bluetooth, and an 8 MP camera. The Nexus 4 currently runs Android 4.2.2, but Google is slated to release Android 4.3, codenamed Jelly Bean.

Google shares closed sharply lower yesterday amid a broader market sell-off, falling 1.87%‎ to close at $850.15.

-- Written by Chris Ciaccia in New York

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