Google doesn't make any money off their Nexus devices. They sell them close to cost. Unless Apple is planning to convert itself into an advertising company (like Google), I don't think holding out the Nexus branded devices as an example to follow is reasonable. Samsung is really the only player making significant money in the Android space. I think it makes more sense to look at what they are doing.
It's now written on the wall for everyone to see that devices will fall in price in the next decade and with it will go profit margins, money will be made by volume of sales, Samsung is just where like Nokia once was in this place, Google just want to accelerate that because it makes business sense to them.
Apple already realized that as their recent announcement demonstrated.
I didn't said it was, but if you think their high margins can be sustained forever then I think the discussion is over and you're just cheering for Apple, nothing wrong with that, but it's not what I think is sensible for people to do, cheer for Apple, Google, MS or whatever.
My point is that Apple is going to struggle to compete against commoditized devices precisely because Google doesn't care about profit on the actual device, Samsung are making money with Android but largely by using the Apple model (high quality hardware, tightly integrated software and a butt-load of advertising).
While Samsung is a threat to Apple they are largely on a level playing field, Google with the Nexus devices isn't even on the same playing field and that was my whole point.
As Apple how do you compete with a Nexus 4 (for example) (which is about get refresh again and the rumour is 1920x1200 screen, stupid fast hardware yada yada).
You can't compete on price as you have to make money on the device and a price war when you are at £500 and your competitor is at £200 is going to hurt (plus Apple is seen as a luxury marque and ironically dropping the price may make the product less desirable to the type of consumer who wants to spend £500 on a mobile, that is why the 5C is interesting).
You can't compete on advertising, Google is the worlds largest Internet advertising platform.
You can't compete on hardware features, you will go ahead perhaps briefly but the Android manufacturers will catch up or leap-frog past again almost immediately (iPhone 5S is impressive hardware but anyone want to bet that there won't be a faster Android device by Christmas?).
So what you have left is reputation (Apple does really well here) brand loyalty and perceived value all of which Apple does well with but the problem with these is that they will get you the percentage of the market that cares about these things (http://tech.fortune.cnn.com/2013/09/05/apple-smartphone-loya... is interesting for example, people are far more loyal to their carrier than they are their hardware manufacturer) and the people who identify with your product and that to me sounds like Mac vs PC all over again and Mac ended up with what 10% of the market (admittedly a very profitable 10%).
All this is of course my opinion and I'm not saying the sky is falling on Apple (it's clearly not) but I will be really curious to see what they do over the next few years.
