Android Central

So, the Google Nexus 7 is the hot ticket right about now. And so it should be. Despite the substantial leaks and rumors leading up to yesterdays announcement -- including the accidental posting of that ​video, it still blew the doors off when Hugo Barra officially unveiled it duriong the day 1 keynote at Google I/O. A stock Google tablet, running the latest version of Android, sold cheaply, and directly from Google. It's almost too good to be true, but, how did the Nexus 7 come about? In short, pretty quickly. 

Andy Rubin, and Asus Chairman, Jonney Shih, have been speaking to ​AllThingsD ​about the origins of the Nexus 7. Google provided Asus with the challenge -- build a high end tablet, that could sell at $200, and they had just 4 months to get it done. 

Shih also sent members of his team to work at Mountain View, so as to put them closer to Google, and to have a 24 hour development cycle. While it seems as though Asus may just have pulled off mission impossible, Rubin has heaped the praise onto the Taiwanese OEM. 

He said that I don’t think there would have been any other partner that could move that fast.,” and that “we went from zero to working product in four months.” Whichever way you look at it, 4 months to release a completely new product from scratch, running a completely new version of Android, is pretty darn impressive. Hats off, to Asus. 

Rubin also acknowledges the lack of a content ecosystem, has played a big part in the, thus far, poor uptake of Android tablets. With the release of a $200 tablet, and the additional content announced for Google Play, Google have themselves a device that could compete on a level playing field with the Amazon Kindle Fire. And, a high-end device at that. 

And then comes the money. In getting a high end device out at a rock bottom price, the Nexus 7 will be sold with next to no margins. Being sold through the Play Store, Google also absorbs all the marketing costs of the Nexus 7. One of the big questions on every ones lips now is, what will this do to the Android tablet market as a whole?

Source: AllThingsD


Reader comments

Google Nexus 7 developed in just 4 months, sold essentially at cost price


"One of the big questions on every ones lips now is, what will this do to the Android tablet market as a whole?"

I think it will provide steeper competition for quality products at a cheaper cost across the competition. So the users should benefit from better products. And some of the smaller companies will potentially lose customers. We will probably start to see a suite of elite manufacturers completely taking over. But...there will still be several of them. So there will still be competition on the market driving improvements. I think this will provide a very fruitfall future.

Its actually bad for Android tablets, and won't lead to better products.

Anytime a product is released "at cost", all incentive to produce any competing product is removed from the market. If HTC, Asus, Acer, Sony, LG can't make a profit they won't release any tablets, nor spend any money developing them.

Lets say a manufacturer's engineers work diligently to reduce cost, find a way to further reduce the component costs by using cheaper parts, more automated production, etc.

Do they go ahead with the project knowing that Google might release a product AT COST even before they get theirs to market, thereby destroying any possibility of making a profit? I think not.

This purges the market of any incentive to compete. Its like competing with the government.

Barnes and Noble and Amazon could do this because they planned to make money via another means (sales of books). (Same as Apple, but they are too greedy to sell any anything at cost). Google can do this by tying you into the Google Play store and make money from that?

But what about HTC or Acer? Where does their income come from. How does Asus make any profit, or even pay the bills.

This kills the general purpose tablet.

Those manufacturers can come up with better products and make a profit on it; even by selling it at a higher cost effectively. But now that we have some quality at a nice price, we will see less products barely operating on their hardware. Eventually we will see only the top manufacturers doing well on the market, but that's ok. And every once in a while a someone new will come along with something innovative and take the spotlight for a while.

So I disagree, but I can understand your viewpoint and where you're coming from. It's sort of the argument of Wal-Mart ruining small businesses. It definately hurt the small manufacturers competing for prices, but in the end I'm on the side of the fence that believes it was best for the community to have access to those resources that they wanted at a significant price benefit.

Google is trying to push their cloud storage feature through the Nexus Q and eliminate SD cards completely. Sd cards are horrible. Phones without them can read and write much faster. 8gb is more than enough if you use cloud storage.

I don't think the Nexus 7 and Google Play can compete with the ecosystem of the Amazon Appstore and the Kindle Fire. I'm sure they will garner some ground on Amazons product, but with Amazon dominating over 50% of the Android tablet Market, Google has a very small shot to take it back.

Amazon content is just ENORMOU. The fact you can get a Kindle Fire pretty much anywhere, even the grocery store (kidding, relax people), shows that the marketing is there. Google is only selling this through there online store, correct me if I'm wrong? No Bestbuy, Target etc. No branded mobile carriers right? Yeah, it's gonna be a tough sale. You would have to be a Google-holic to buy this, everybody else is still gonna get a Fire. Also the Fire 2 is rumor around the corner.

What I think Google should do/focus on is offering a high end tablet, soley aimed at the iPad 2 AND start getting devs to make apps for tablets only. Apple has over 200,000 apps specifically made for iPad, Google has a few hundred, see that discrepancy?

I would spend $400+ on a high end (materials, hardware, software, slim, weightless) Google tablet.

Don't forget though, the Amazon ecosystem is extremely limited. We haven't seen it or the Kindle Fire in Europe yet. The Nexus 7 comes out 2-3 weeks. At least over here, Google has the jump on Amazon. We can't buy music yet, but someone like me who uses Spotify won't miss that. Movies, Books, hopefully magazines too, in Europe this could be a winner. At half the price of iPad too. 

The Amazon Fire tablet doesn't even begin to compare with the Nexus 7 tablet. This is essentially a $400+ high end device; you're just getting it for $200. Amazon will have to offer considerably, considerabley, considerabley (said enough) more to even make people consider going back to it again since tablets are now starting to come out at the same price range with full Google services available to it at release with better specs.

Let's face it, Android tablet is nothing but a complete failure so far. I have the original GTab 10.1 and it is collecting dust. Hardware makers can't make any profit out of it because of the price cap Apple iPad set. Google is smart enough to realize that and take it over to push hardware at cost and hope for the content purchase to make up for it. Basically, it is now a game console business model.

Make a high end tablet won't be the solution either. There are various iPads (which for most ppl consider to be the high end tablet) to compete with. Not to mention the upcoming Windows 8 tablet that let you run your everyday productivity apps.

This isn't a high end tablet?
It's missing a couple things
Large storage
rear camera
Besides that this is high end, if you think about it, the price of a 1280x800 7" screen should be more then a 1280x800 10" screen, so Google could have released a bigger tablet for probably the same price. The reason they probably didn't is because they feel the OEM's can work in that size. The fact that Fire and Nook are canabalizing the 7" size already should gives Google some cover from OEM's for releasing a cheap high quality device.

Microsoft Surface tablet comes in two versions -- only one runs everyday productivity apps (and you will pay for that privilege)-- the other tablet will be "stuck" running apps... which, presumably, means that Microsoft will be creating its own 'app store'

If the 8gb version is selling at cost, then they must be making money off the 16gb version. No way does an extra 8gb of storage cost $50.

Even still, Google is giving $25 credit to Play Store with N7 purchase -- that's a nice offset for the extra memory.

Truth be told, I'd pay the $250 without the credit. I don't find it excessive -- your mileage may vary.

No way I'm buying an N7 -- been using my wifi Xoom for over a year: 7 inch screen is just too limiting (I've spent 2 weeks with a KFire... giving up 1/2 the screen to a keyboard is just plain silly).

+1 I have no intention of replacing my Nexus Xoom with a Nexus 7. I like having my 32GB card + 32GB of internal storage and a 10" screen.

But I *might* buy a Nexus 7 for my Mom for Christmas...

Ditto, getting a Nexus 7 for my sister this Christmas... My mother already has a Transformer and she's had my keyboard dock on loan for a while. I'll probably wait until next summer before I upgrade my own Transformer, I think I might opt for an 8.9" device at that point tho, hopefully from ASUS tho I'll settle for Samsung.

I don't get this content comparison with the Kindle Fire and Nexus 7. Download Kindle app, Amazon MP3 and done. You don't have video, but the Play movies app has a good amount of content.

They didn't build this from scratch. Asus was already working on a 7 inch tablet, so they were already kinda ready for it. They just took their 7 inch tablet and redesigned it bit cosmetically and obviously running JB instead of ICS

>"Google provided Asus with the challenge -- build a high end tablet"

Then they failed. It is not a "high end tablet" with no rear camera, only 8/16 GB of storage, and no SD card slot. Don't get me wrong, it is nice.... and the price is beyond reasonable. But to me it is not a "high end tablet."

Meh, by enthusiast standards I agree completely... But as a high end consumer device it'll do fine without those things. The first iPad didn't even have any cameras, none of them have expandable storage... This is still a very high end device compared to some of the tablets currently selling for the same price, like the Fire, or the Viewsonic tablets you see at Costco. Now Google just needs to market it well and/or sell it somewhere besides the Play store, if they don't do that it'll be a blip in the radar and we'll have forgotten about it as soon as the next round of tablets from Samsung/ASUS hits.

Btw, I get the storage but i dunno how lack of a rear camera even makes it into the same sentence... I've used my tablet's rear camera maybe twice, and on both occasions it was because my phone was out of reach and I wanted to scan something.

I love google and ASUS, but we have been talking about a 7" tablet from ASUS that could hit $250 or less since the Transformer Prime, which was late December/early January, so unless they been on product line for 2 months, it is closer to six months

.. that said, I own two ASUS tablets and plan to own the new 7 inch one as well

A significant reason for the lackluster sales of Android tablets is the lack of significant mainstream advertising. Since the iPad was announced, Apple has released continuous mainstream, effective, well done marketing campaigns for the iPad showing it doing useful "cool" tasks vs. sporadic mainstream ads for Android tablets. I pass about a dozen advertisements for the iPad on the bus downtown everyday vs. zero for Android tablets. Catching up with my network TV from last night via TiVo, I saw more iPad commercials last night alone than I have seen for competing Android tablets in the last six months. Did Google ever consider that maybe, just maybe a significant reason Apple has 75% or so of the tablet market is they do about 95%+ of the mainstream advertising for tablets, and have been doing that since the original iPad announcement? You don't need a Harvard MBA to realize there is a significant relationship between % of sales, and % of mainstream advertising. Add in Apple's current "mindshare", iPod / iPhone halo impact, and all the free Apple / iPad press mentions, the result is a marketing juggernaut that will take a significant, effective, long-term mainstream marketing campaign to crack.

If you walk into a BestBuy, the iPad has a brightly lit end of aisle location that you can not help walking by if you spend more than 5 minutes in the store. Although now my local BB has a dedicated other tablet section, it is not as brightly lit, or impressive as the iPad end aisle location. When the Xoom was introduced, the Xoom was in the Netbook section as far as you could get from a high traffic area. For a short time, we did see Xoom commercials, but they were "too geeky" to attract the attention of the mainstream consumer, did not show the device doing cool, useful, everyday tasks like the iPad, and did not include why you should buy the Xoom over the iPad at least in terms the non-tech consumer could appreciate.