Spec Comparison: New iPad v. Nexus 7 v. Kindle Fire v. Surface

| Analysis

Google announced its first direct foray into the tablet market on Wednesday with the Nexus 7, a 7 inch tablet that will run Android 4.1 Jelly Bean. As we said in our coverage of the product’s launch, the company has completely reset the bar for what to expect for a 7 inch tablet. Even more interestingly, while the Nexus 7 competes with the Kindle Fire or the Nook Color tablet in terms of size, it also competes with Apple’s new iPad and Surface by Microsoft in terms of specs.

Accordingly, we offer you the following spec shootout between the new iPad, Surface for Windows RT, Amazon’s Kindle Fire, and the Google Nexus 7. Due to limitations in space, we have to omit the Nook Color Tablet, though that device is popular with the same market that is also interested in the Kindle Fire.

The Sound You Just Heard Was the Value of Kindle Fire Hitting the Floor

We’re going to start off with our conclusion, because we think it’s important. The media tablet market just became a two-horse race with Apple’s new iPad as the champion of the high-end, full size touch tablet and the the Google Nexus 7 carrying the Android banner. Samsung’s Galaxy Tab line and Motorola’s Xoom family might as well pack it up and go home.

On the hybrid side, the Asus Transformer line will be fighting for the title of King Toaster-Fridge with Microsoft’s Surface, and may the best device sweep up the crumbs left by Apple and Google.

Below the fold, we have some specific analysis on these devices and their specific specs.

The Specs
(Product images are intended to be close to scale, but since we’re shooting in the dark with Surface, they may be off by a pixel or two)

  Apple's new iPad Surface for Windows RT Amazon Kindle Fire Google's Nexus 7
Product The New iPad Surface for Windows RT Amazon Kindle Fire Google Nexus 7
OS (current) iOS 5.1 Windows RT Android 2.3 (forked version) Android 4.1 Jelly Bean
Dimensions (in.) 9.5 x 7.31 x 0.37 ? x ? x 0.37 (9.3mm) 7.5 x 4.7 x 0.45 7.81 x 4.72 x 0.41 (198.5 x 120 x 10.45 mm)
Weight (lbs) 1.4 (Wi-Fi) 1.46 (4G) 1.49 0.91 0.75 (340 grams)
Display size (in., diag) 9.7 10.6 7 7
Display Resolution 2048 x 1536 (IPS, LED bklight) Unknown (Listed as “HD,” which is likely to be 1280 x 720) 1024 x 600 1280 x 800
Pixels per inch 264 Unknown

169

220
RAM (MB) 1024 (1GB) Unknown

512

1024
Processor A5X (dual core) 1 GHz;
quad core GPU
Unspecified Nvidia ARM-Based Tegra Processor TI OMAP dual core/ 1 GHz Nvidia 1.3 GHz Tegra 3 Quad-core CPU
User Storage (GB) 16/32/64 32/64 8 8/16
Expanded Storage x Unknown - microSD possible x √ (through microUSB)
Cloud Storage iCloud Unknown - Microsoft Service Possible Free Cloud Storage for Amazon Content Google Cloud
Front Camera “VGA” √ (resolution unknown) x 1.2 MP
Rear Camera 5 MP (1080p) stabilization √ (resolution unknown) x x
Camera Flash x Unknown x x
Microphone Unknown** x
Audio/speaker mono spkr, stereo headphone Unknown** mono spkr, stereo headphones stereo spkrs & headphone
Wi-Fi 802.11 a/b/g/n Unspecified (probably 802.11a/b/g/n) 802.11 b/g/n 802.11 b/g/n
Radio (GSM) UMTS/HSPA/HSPA+/DC-HSDPA/4G-LTE Unknown x x
Radio (CDMA) CDMA, EV-DO/UMTS/HSPA/HSPA+/DC-HSDPA/GSM Unknown x x
Bluetooth 4.0 Unknown (probably Bluetooth 4.0) x √ (unspecified)
GPS w/4G Unknown (likely, if there is 3G or 4G support) x
Battery Life, hours 10 (9 w/ 4G) (11666 mAh) Unspecified (31.5 watt-hr) 8 (4400 mAh) 8 (4325 mAh)
Accelerometer Unknown** x
Magnetometer/Compass Unknown** x
Gyroscope Unknown** x
Video out HDMI (w/ accessory) + AirPlay Micro HD Video x x
USB x USB 2.0 USB 2.0
Sensors Ambient Light Unknown** x Ambient Light, Proximity
Colors Black or White Gray (with variety of colored keyboards) Black Black
Price US$ (Wi-Fi) 499/599/699 Unknown (similar to other ARM-based tablets - say $399 and up) 199 199/249
Price US$ (3G/4G) 629/729/829 Unknown (see above, but add roughly $100) N/A N/A

** Microsoft hasn’t announced these features, but at this stage of the game they are all but standard. Accordingly, we think it safe to assume it will be included.

Display

Google and its hardware partner Asus have achieved a remarkable feat offering so much for so little. In fact, I am of the opinion that Google is subsidizing this device in some way, but that’s only because we don’t see how there can be any margins at this price. After all, Amazon was selling the Kindle Fire at a loss at the same price point six months ago, and the Nexus 7 has markedly higher quality (and therefore more expensive) components.

That’s neither here nor there, however, as the Nexus 7 starts at $199, and that includes a 220 pixel-per-inch display with a resolution of 1280 x 800. That’s 720p with some change left over on the shorter side, and it makes for the best display yet on a 7 inch device. It’s not as good as Apple’s new iPad, at 264 pixels per inch, but it’s darned good.

When we compare it to Amazon’s 1024 x 600 resolution on a display roughly the same size, Amazon is a clear and distinct loser left far behind. At the same time, we don’t know for sure what resolution Surface for Windows RT will have, but the educated money is on either 1280 x 720, or more likely 1336 x 768. In other words, what Big Redmond led us to expect is a device with very low pixel density, and it’s likely to look like crap next to both the new iPad and the Nexus 7. That’s a double whammy!

The bottom line on display quality is that Apple rules the high end with its 2048 x 1536 Retina Display on the 9.7 inch new iPad, while Google rules the 7 inch market and everything else that’s not a new iPad with the Nexus 7.

OS

Google announced Android 4.1 Jelly Bean at the same time it showed off Nexus 7. This update to Android looks great, and it closes quite a few gaps with Apple’s iOS (for instance, voice controls), while it lengthens some areas where Google already led. Notifications, for instance, look fantastic on Jelly Bean, and we think beat Notifications even on iOS 6. That said, both OSes await hands-on experience.

All of this is subjective, but we think that Nexus 7 and Jelly Bean combine to make for the first Android tablet that can reasonably give the iPad a run for its money in terms of the user experience. That’s huge, and we predict that no matter what your platform of choice, we’re going to see a rush of innovation during the next two years now that Apple has a serious challenger.

We’ve already commented on our belief that Microsoft is making a mistake with Windows 8 in trying to make the tablet and the PC be, essentially, extensions of one another. While we happily give Microsoft kudos for going its on way with Windows 8 and the Metro interface, in the end buying a Surface means buying into Microsoft’s vision of going back to the future.

It’s quite possible that Big Redmond’s approach is right on the money for some segment of the market, particularly old-school IT types. We won’t know until these and other Windows 8 tablets get released later this year. If Microsoft is right, it will sew up the market for toaster-fridges.

Amazon’s Kindle Fire is another beast altogether. It runs a forked version Android 2.3 that Amazon customized to be a portal to Amazon content and physical goods. There is a subset of users for whom that is a great choice, but it’s a shadow of a media tablet. When you consider that for the same price you can now get the Nexus 7, those for whom it is a good choice shrinks to nobody, and maybe their mother.

More: Kindle E Ink devices are terrific ereaders, but in our opinion, reading even a Kindle book is a far more enjoyable experience on the iPad than it is on the Kindle Fire. The same is going to be true on the Nexus 7, too. It’s faster, can do the page turning thing that we old fogies like, and text looks better.

No, at this stage of the game, the OS on the Kindle Fire is the clear, hands down loser in the tablet race.

Horsepower

Apple’s new iPad is powered by a dual-core 1 GHz Apple A5X processor. It’s fast, but the quad-core 1.3 GHz quad-core Nvidia Tegra 3 processor in the Nexus 7 is likely going to smoke the new iPad. Microsoft won’t specify which Nvidia Tegra processor will be in the Surface for Windows RT, so we it’s a tad difficult to offer an opinion. The processor in the Amazon Kindle Fire is low-end and slow. Once again, it’s the clear loser.

Google is also winning the graphics processing race, because the Nvidia system the company is using has 12 cores of GPU power. Apple’s quad-core GPU in the new iPad is no slouch—in fact, it’s very fast—but the Nexus 7 is probably going to be able to do some things on the graphics side that exceed the new iPad. We’ll have to wait and see how it works in the real world, but during Google’s keynote, the company showed off some great looking 3D games.

The Surface represents more unknowns on the GPU side, and the Amazon Kindle Fire is just plain slow and ugly.

All told, the Nexus 7 is probably going to be the clear leader on horsepower when it ships. A lot of that will depend on optimization, where Apple has the benefit of controlling every aspect of its iPad, but we still expect the Nexus 7 to be tops in horsepower.

Case, Looks, and Styling

The Nexus 7 looks great, front and back. That’s in part because it looks a lot like the iPad, or maybe the iPhone, from the front. It will be interesting to see if Apple tries to assert its design patent—the same patent that just won an injunction against the Samsung Galaxy Tab—against Google.

Google Nexus 7

Google’s Nexus 7

Whether or not that happens, we think both the new iPad and the Nexus 7 look great. Surface by Microsoft looks good from the front, but we think it is ugly as sin from the side and the rear. When we said so in our iPad/Surface spec comparison last week, several Microsoft fans let us know that we were wrong, but then they’re fans of Microsoft, so…

In any event, Kindle Fire is also a not-very-attractive hunk of plastic, leaving Nexus 7 and the new iPad at the top of the heap for looks.

Keyboard?

Nexus 7 is designed to be used without a keyboard, like a touch tablet should. The same is true for Kindle Fire, so for a change, Amazon isn’t bringing up the rear. Yay Amazon!

Surface for Windows RT is a toaster-fridge, however. It’s designed to be a touch device and to work with a keyboard. We know there are some people who think that this is the bee’s knees because they just can’t grok typing on a touch-display. Whatever, the world is a big place, and toaster-fridge lovers can enjoy their Surface devices.

Surface by Microsoft with Keyboard

Ecosystem

Apple rules the ecosystem. iPad has more apps—225,000 these days—designed for it than any other tablet, and the iTunes Store is the best place to buy music, movies, and TV shows.

Amazon has the second best ecosystem, and this is an area where the company not only doesn’t lag, it leads (just behind Apple). The company has more ebooks than anyone (Google’s claims notwithstanding), a healthy Amazon Appstore for Android, tons of movies and TV shows, and direct access to all those physical goods the company sells, too.

Microsoft has no real ecosystem for Surface, at least not yet. We expect that to change once Windows 8 rolls out later this year, but the company is still going to lag far behind its competitors on this front.

Which leaves Google and the Nexus 7. A big part of Google’s tablet problem has been the lack of dedicated tablet apps and a smaller catalog of books, movies, and TV shows. The company addressed some of this with the creation of Google Play, where it brought all of its Android digital content under one roof. Google Play is, frankly, a great step forward the Android platform.

The bigger news on this front, however, is that Google is now giving developers a solid tablet target for their apps. We believe this is going to result in many more apps being developed and tweaked for the Nexus. Google could really narrow the dedicated tablet app gap between Android and iPad by releasing this device. It hasn’t happened yet, but look for exciting new things to happen in the Android tablet app space starting within three months.

Conclusion

The Nexus 7 looks great, at least from the specs and Google’s presentation. It’s very inexpensive, but it has high-end features. That makes it great competition for Apple’s new iPad, and it truly represents the first credible Android challenger in this space.

Now, it’s possible that this device will take some sales away from Apple’s iPad. It’s possible, but we think that its real effect is going to be to grow the tablet market as a whole, and that this growth will make up for any potential lost iPad sales.

Where Google is going to kill it in by eating up every other device out there. Samsung’s sales are going to collapse. Kindle Fire is going to nose dive. Unfortunately, Barnes & Noble’s Nook Color tablet is going to take a hit, too. Nothing on the Android side comes close to the Nexus 7, especially for the price.

Which means that Microsoft’s Surface product is also going to suffer. Microsoft was already working hard to position itself as the toaster-fridge king, but now the company can’t even vaguely hope to skim a few sales from the I-Hate-Apple crowd, because those folks are going to get a Nexus 7.

In short, Google has hit a home run with the Nexus 7. If it can manufacture them in high enough quantities—remember that Asus is the actual maker of this device—it will sell a ton of them. Apple is still king of the full size touch tablet, but the bar has been set if Apple wants to also enter the 7 inch space.

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Comments

Bosco (Brad Hutchings)

I disagree about the subsidy. Amazon has been flirting with a much lower price point. I got a special offer from them at start of June for $149 new Kindle Fire. I don’t believe that either Google or Amazon is subsidizing the hardware now, per se. They may be betting on cost curves lowering with volume, typical of any hardware product. But they’re not aiming for Apple-level margins on hardware. ASUS doesn’t need to do that to remain very successful.

Also remember that Google users are free to install competing app stores and music services. Google even demoed a competing music streaming service.

Finally, I’d still pick the nit that Kindle Fire is “forked”. It’s skinned a little more aggressively than HTC and Sammie phones. You can still sideload onto it. You can download and install Google Play on it if that floats your boat. Perfectly legal and legit, although Google doesn’t go as out of their way to help you do it as Amazon does with its own Android Appstore.

Bryan Chaffin

Brad, you could well be right about the subsidy issue. This industry is evolving at a blistering clip.

What I didn’t necessarily convey in the write up is that if Google needed to subsidize the thing to hit this price point, it was worth it. This device could really jumpstart the Android tablet market.

We’ll have to agree to disagree on the forked issue, but it’s moot until Amazon drastically ups its hardware game.

MacFrogger

It’s even more clear now why MS tried to pre-empt the show with its own vaporware announcement - they know they are in trouble.  With not even a launch date yet for their own tablet, they have no alternative but to become Elmer FUD…

iVoid

I still prefer the Nexus 5. The Nexus 7 seems a bit lame in comparison. smile


wink

archimedes

still prefer the Nexus 5. The Nexus 7 seems a bit lame in comparison.

Nexus-6 all the way! :D

jfbiii

The battery life to processor comparisons are what I find interesting. Gotta wonder how much of a necessity the beefed up graphics processing is on the Nexus vs how much is a luxury worth less battery time.

paikinho

iSuppli has a wide ranging breakdown of the costs which seems to suggest that google will be making money on every device.

I think they will sell millions of these things.
Time to buy some google stock.

Paul Goodwin

Looks to be a really nice machine. The screen looks to be a good one except that it’s too small for extended web browsing. Seems to small to be used as a serious work portable device too

The extra horsepower is great for gamers, but my iPad 2 is still very fast. The bottlenecks for speed for non-gaming tablet use are not the processors or RAM, they are the ISPs and servers we connect to that are slowing our world down.

The price is fantastic. It’s hard for me to believe they are not selling this with zero or negative margin to gain market share. But like your article says, no matter….it’ll boost the tablet buying population. Sure, it’ll eat away at the percentages Apple has today , but I too believe Apple’s sales volume will continue to rise as the whole tablet market expands.

I would be disappointed using this after using an iPad because of the screen size, but for the people not able to pay for the iPad, this will be a great buy.

MelIal

You should really mention the fact hat Apple has the iPad 2 at $399 as the low end of the iPad range which puts it a lot closer to the Nexus 7 cost-wise while still retaining advantages such as a screen more than twice as large, rear HD camera, video-out, 3G option etc.

Also, the Tegra 3 is not nearly as big an advantage as you seem to believe.

The Tegra 3 GPU that the Nexus 7 uses has been demonstrated to be significantly slower than the quad core GPU in the iPad with the Transformer Prime which runs a Tegra 3 only giving 64.4fps to even the iPad 2’s 88.8fps in the GL Benchmark, 78.4fps vs 148.2fps in the offscreen render and 28.6fps to the iPad 2’s 32.3fps according to Anandtech.

In terms of HTML 5 and JavaScript performance even the iPad 2 completely blows the Tegra 3 powered Asus tablet out of the water with 300 moving objects at 30fps while the Asus gets far below 100 objects according to the Spaceport PerfMarks report.

With the new iPad delivering quad-core GPU performance double that of the iPad 2’s dual-core this difference is even more pronounced.

That said, the Nexus 7 is an impressive amount of bang for the buck, but it looks like Google has completely knifed all other Android tablet manufacturers in the back big time.

Bosco (Brad Hutchings)

That said, the Nexus 7 is an impressive amount of bang for the buck, but it looks like Google has completely knifed all other Android tablet manufacturers in the back big time.

Why do you think this? Google has simply shown the OEMs where Google thinks the sweet spot is. They’ve also upped the ante on pure Android experience. The OEMs need to figure out that their attempts at differentiation by skinning take away from the Google experience. ASUS got this chance because they mostly differentiated their high end transformer with great hardware, and let their software partner, Google, handle the software. Sammie really needs to figure this out.

MelIal

@Bosco,
Extremely unlikely. ?All indications to date are that competing Android tablet manufacturers have struggled to get anywhere close to Amazon’s Kindle Fire pricing without having other content or advertising income streams to give them a return back on loss-leader hardware.

iSuppli’s guess on component costs was made without having even seen the device and ranges from $130-$210 for the base model and that is only the components cost. Add on design costs, production and labour costs, advertising and a little thing called margin and it’s hard to see how other OEMs are going to compete.

Make no mistake about it, the Nexus 7 is squarely aimed at Amazon’s Fire which completely eviscerated Google’s business model for Android.

Google could not let the Fire capture the lion’s share of the Android tablet market and has thus had to cut off its nose (other Android tablet OEMs) to spite its face (Kindle Fire).

Bryan Chaffin

Make no mistake about it, the Nexus 7 is squarely aimed at Amazon?s Fire which completely eviscerated Google?s business model for Android.

I think it would be more fair to say that Amazon’s Kindle Fire completely sidestepped Google’s business model for Android without giving anything back.

I also think that Google wasn’t aiming the Nexus 7 at the Kindle Fire, but was rather making absolutely sure that the Kindle Fire simply wasn’t an issue. I believe that the Nexus 7’s primary goal is to legitimize the Android tablets and kick start growth in this sector.

The Kindle Fire as we know it today is merely collateral roadkill on the way. smile

MelIal

@Bryan Chaffin,
I think eviscerate is a quite appropriate term to use. After all, in “side-stepping” Google’s business model, Amazon also drew a blade across the bellies of Android OEMs making it nigh impossible for them to sell competitive tablets.

Google desperately wants at least one tablet running Google Apps and Services and providing an advertising income stream on the market that will sell in enough volume to make modern Jelly Bean a viable tablet app platform.

After all, Google’s iOS cash cow of Search and Maps on the iPad is steadily being eroded as Apple cleanses iOS of most Google income streams by Siri and Apple Maps, so they desperately need a new income generator in the explosively growing tablet market.

MacFrogger

MelIal said:

Make no mistake about it, the Nexus 7 is squarely aimed at Amazon?s Fire which completely eviscerated Google?s business model for Android.

Bryan replied:

I think it would be more fair to say that Amazon?s Kindle Fire completely sidestepped Google?s business model for Android without giving anything back.

I think you are both right - the Nexus 7 is squarely aimed at the Fire (as Mellal said) because it did sidestep Google’s biz model (as Bryan more aptly put it). Amazon’s success with the Fire had to really upset Google - imagine watching a company launch a successful product based on your software only to be cut out of the revenue!  They really had to try and re-claim this part of the market - isn’t business fascinating?

Matt

Kindle fire specs from Amazon’s web page.


Audio   3.5 mm stereo audio jack, top-mounted stereo speakers.

jfbiii

...imagine watching a company launch a successful product based on your software only to be cut out of the revenue!

Google’s seen that cloud from both sides now.

doug

I am an Apple diehard, but I will definitely look hard at this one.  Very nice specs, helluva price.  My plan was going to be, see if the mini-iPad (or SuperTouch) comes true, and decide if I want one for Christmas.  I will still wait and see, but if the specs of the mini-iPad are similar, and they likely will be, and the price of a mini-iPad is $299 or more, I will probably go with this Google.  Why not??

One other thought:  this really makes the good ol’ iPod Touch, at $199 for less performance and half the screen, look pretty overpriced.

Bosco (Brad Hutchings)

I think it would be more fair to say that Amazon?s Kindle Fire completely sidestepped Google?s business model for Android without giving anything back.

If you take an Apple-centric whole widget view of Google’s business model, sure. But that’s not their business model, and if you hooked Page, Brin, Schmidt, and Rubin up to a car battery, in series, with jumper cables clamped to their nipples and threatened to turn the shower on, not a one of them would say anything bad about Amazon because they just don’t think that way. And because Kindle Fire has been a huge positive for Google:

1. Made real inroads for the platform in tablets.
2. Shows that a platform can work well for developers and users when there are multiple channels for software and content.
3. Found a sweet price point at 1/2 of iPad’s.
4. Proved that Google could and would play very nice even with direct competitors who want to expand the Android ecosystem.
5. Users’ investment in Kindle Fire apps isn’t sunk investment if they want to upgrade to a Google device.
6. Chipped away at iPad’s dominance.

BurmaYank

“Make no mistake about it, the Nexus 7 is squarely aimed at Amazon?s Fire which completely eviscerated Google?s business model for Android.”

“Why do you think this? Google has simply shown the OEMs where Google thinks the sweet spot is. They?ve also upped the ante on pure Android experience. The OEMs need to figure out that their attempts at differentiation by skinning take away from the Google experience ... Sammie really needs to figure this out.”

@Bosco/Brad:

I tnink I may be agreeing with you, since you seem to be saying something more profound about the direction the makers of the non-iOS tablet OSes (and also of the non-iOS smartphone OSes) seem to be realizing they need to start heading if they hope to be at all competitive: namely to try (at this late hour) to gain whole-widget control over their devices (i.e. - within a generic Android walled-garden, or a M$-Surface walled-garden, or a KindleFire/fork-OS walled-garden, or a Nook/fork-OS walled-garden, as much as possible like the walled-gardens of Blackberry or iOS).  It seems to me that this conclusion (i.e. - Android is now going “walled-garden”, because it must) is the logical consequence of what you’ve said about “where Google thinks the sweet spot is, and needing to up… “the ante on pure Android experience”. and how Google now needs to somehow coerce/extort their OEMs into abandoning “...their attempts at differentiation *which) take away from the Google experience

“Operation ...the Google experience” is Android’s new “walled-garden” campaign name, I’d say, and if so, I’d agree with what you’ve said, above.

MOSiX Man

One other thought:? this really makes the good ol? iPod Touch, at $199 for less performance and half the screen, look pretty overpriced.

Definitely true. But I think Apple foresaw the end of days for iPod Touch (at least in its current form) coming. That would explain why it hasn’t seen any updates or spotlight exposure in quite a while. The only thing that gives the iPod Touch any ‘advantage’ over the Nexus 7 is its size; It’s more portable and really fits more into the ‘fancy music player’ market than the ‘small tablet’ market. (I doubt anyone will be seen jogging with a Nexus 7 strapped to your arm?)

I expect to see Apple announce their own 7-ish inch iPad later this year and, at that same time, drop the price on the iPod touch (or release a reasonable replacement for it) at a more competitive price point.

b9bot

No content, no Netflix, no apps that run natively with that size screen. The google product is a poor choice along with the Kindle.

Bosco (Brad Hutchings)

I tnink I may be agreeing with you, since you seem to be saying something more profound about the direction the makers of the non-iOS tablet OSes (and also of the non-iOS smartphone OSes) seem to be realizing they need to start heading if they hope to be at all competitive: namely to try (at this late hour) to gain whole-widget control over their devices

No. You mistake influence with control, and you misunderstand the idea of companies focussing on what they are good at. Samsung and HTC build great phone hardware. Google builds a very nice phone and tablet OS. When Sammie and HTC mess with the software aesthetics, they leave a sheen of confusion. They actually manage to marginally reduce end-user value. Google will not force them to abandon the skins, but by offering a more pure example, has gotten them to dial it back considerably. That’s influence. By contrast, control would be putting “no skins” in the master license agreements.

People seem to think that Google and Amazon will be battling it out over tablets. Nope. To the extent that they “battle”, it will be over cloud services. But I think both recognize that once cloud isn’t going to own each person, and that there is more money to be made by allowing people to split their loyalties among various clouds, seamlessly. If consumers want a monolithic cloud, they can already choose Apple or Microsoft, maybe Facebook if you want to lump Facebook into this.

MOSiX Man

I think it would be more fair to say that Amazon?s Kindle Fire completely sidestepped Google?s business model for Android without giving anything back.

I agree, yet disagree. Amazon did side-step Google’s intended business model, somewhat. But the way it did so really harmed the other Android Tablet makers, and not so much Google. As far as not giving anything back, that’s non-sense; Amazon gave Google the blueprint for making an Android tablet that is actually differentiated from the iPad in a positive way, for a change.

Now that Google has learned that lesson, they are running with it. Will they kill the Kindle Fire in the process? They don’t care as long as they get to reap all of the revenue that Amazon is losing. Also, It will force any other would-be Android tablet makers to step up their game to be up to par with the new ‘reference design’, which will mean more stiff competition for Apple. So Google will end up owning a good portion of the tablet market or Android tablets, in general, will be significantly more competitive. It’s a win-win for Google.

That being said, the entire situation will change - maybe a little, maybe a lot - when Apple releases their 7-ish inch iPad (which I firmly believe they will). Who knows how it will compare to the Nexus 7? Can Apple find a way to make a smaller iPad, that meets its standard, and the expectations of its customers, in the $150-$250 range? If so, then the race gets really interesting. We’ll see what happens…

BurmaYank

“Google will not force them to abandon the skins, but by offering a more pure example, has gotten them to dial it back considerably. That?s influence. By contrast, control would be putting ?no skins? in the master license agreements.”

Thanks for clarifying that distinction.

I’ll be watching with interest to see whether Android platform fragmentation still keeps becoming so increasingly hobbling & burdensome that Android must keep retreating further & further towards “whole-widget” control, despite Google’s best efforts at merely trying to influence their OEMs to purify their “Android experience”

John C. Bland II

Video out for Nexus 7 should mention the Nexus Q [essentially AirPlay].

gizmotronic

I agree that the quad core processor means that the Nexus 7 will likely outperform the current iPad, but I’m not convinced that it will be anything like “smoking” in comparison. There’s still a Dalvik VM running the show; that, alone, requires more CPU than native, compiled code running on iOS does.

We’ll see, I guess.

Paul Goodwin

Doug.  “I will still wait and see, but if the specs of the mini-iPad are similar, and they likely will be, and the price of a mini-iPad is $299 or more, I will probably go with this Google.? Why not??”

There’s a lot of reasons people buy Apple hardware, and it’s not just for the hardware. When Google can supply what Apple does for a similar device you can compare pricing. Apple’s system of apps, integration with their other devices, their tightly controlled hardware-software integration makes the product worth more. Yes, you can do many similar things on these devices, but the reason people buy Apple products is that they’re very high quality, rock solid, and don’t break. They have more apps that do more things, and they don’t break each other.

Depending on what you want the device to be, the cheaper alternative may or may not be the right choice for you.

MacFrogger

Yo Bosco,

Re Google profit margins on the Nexus 7 - from here:

One way the companies managed that is through razor-thin margins. Google is selling the device through its Google Play store, essentially at cost, and also absorbing the marketing costs associated with the device.

?When it gets sold through the Play store, there?s no margin,? Rubin said. ?It just basically gets (sold) through.?

Slim to no profit on the sale of the device for Google, and Google will pay for the marketing (which can be considered a subsidy). Whatever profit may be there after COG etc - and its likely to be slim - Google is apparently leaving on the table for Asus.  Considering this fact, It’s also possible that Google is making additional payments to Asus (ala Microsoft’s payments to Nokia) to ensure the OEM doesn’t lose money on the manufacture.  If true, this info will likely come out in time - there is no reason to disclose this now.

Bosco (Brad Hutchings)

@MacFrogger: Do you think an extra 8GB of soldered on storage costs $50? So that’s one place where there is margin today—in the percentage of users who opt for the “premium” 16GB version. The other place where there is margin is in volume ramp up. As they make more, they will cost less to make.

Rubin’s final statement in that article is what you need to pay attention to. There is room for all the OEMs to create great tablets if they desire. Google is showing them what Google thinks a great tablet is. Google’s risk here is mostly reputation. ASUS is the one that has to make the margins work. They have a lot of experience doing that.

MacFrogger

Bosco said:

Do you think an extra 8GB of soldered on storage costs $50?

Of course I don’t think that, and I don’t think I ever said that. I’m just quoting what Mr Rubin said - there is “no margin.”  I don’t think you are asking me to make up quotes for him, like there’s “no margin on the 8GB version, but we will make $x on the 16GB.”  He also said Google is paying for the marketing, and that certainly qualifies as a subsidy.

Re your last point: I paid attention to the entire article, even Rubin’s final statement. If you wish to emphasize that, that should this thing become a big success and COG goes down due to volume purchases of components and other economies of scale etc, IOW that someday it WILL become profitable for Google I don’t disagree with you. But the fact remains that it is a “no profit” item for Google right now, at least according to Rubin. Similarly, I don’t disagree with you that it certainly appears that Google is showing the world how to make what appears to be a pretty darn good 7” tablet.  But alas Bosco, I’m a creature of the business world, and quite frankly one has to figure out how to do this in a way that provides a profit. Having said that, there is no question that breaking even or taking short-term losses to gain market share is a well-accepted business practice. As I said previously, I think that all of this competition is great for all consumers, and I hope this product is a big success for Google and Asus.

Bosco (Brad Hutchings)

Not asking you to make up quotes. But in the article you cite, the reporter is clearly discussing the $199 8GB version with Rubin and Shih: Then there was the task of building a high-end tablet that could sell for just $200.

I’m simply bringing up that 8GB of soldered Flash costs nowhere near $50. That’s essentially the well-tested “freemium” model with a base price of $199 instead of $0.

I am quite skeptical of reading too much into parts breakdown cost estimates, especially on tech items where component costs mostly reflect IP and plant investment rather than marginal component cost. Such estimates will naturally bias high and discrete, and will necessarily fail to capture the cost curve when there will be countless opportunities for cost reductions, product improvements, bundling, etc. over the life of the product. A typical and proven MO in CE is to get a product to market without taking a bath and then figure out how to get those comfortable margins after launch, knowing that the opportunities exist but would have delayed the launch.

MacFrogger

Bosco,

Not asking you to make up quotes. But in the article you cite, the reporter is clearly discussing the $199 8GB version with Rubin and Shih: Then there was the task of building a high-end tablet that could sell for just $200.

Of course you are not asking me to make up quotes, any more than I think 8GB of Flash costs $50. But neither you nor I have any idea whether Rubin’s “no margin” line is based specifically on the price of the $199 unit or the estimated ASP of total Nexus 7 sales.  You simply cannot assume it is based on the $199 unit based on the reporter’s segue - having dealt with reporters too many times to count, they rarely get it completely right, and in this particular case it is totally ambiguous.

I am quite skeptical of reading too much into parts breakdown cost estimates, especially on tech items where component costs mostly reflect IP and plant investment rather than marginal component cost.

I agree with you, but - and its a big but: the fact remains that at least for now, according to Rubin, there is “no margin” for Google (we don’t know about Asus’ margin). I gather from the rest of your comments that you agree with me that there is the potential for Google to make a profit on this device in the future.

So to conclude: right now there is no margin for Google in the sale of the Nexus, they are going to pay an undisclosed sum (subsidy) for marketing expenses, and purely speculative but inductive reasoning on my part, they may also be paying Asus a lump sum (ala MS to Nokia) or a per device fee to reduce risk and guarantee some kind of margin for Asus.

Bryan Chaffin

The proof is in the pudding on the margin question: No one else has yet done what Google/Asus have done with the Nexus 7.  The previous price leader at this price point, the Kindle Fire, was as notable for everything it didn’t offer as it was for price.

1.) Amazon is known for selling things at razor thin margins.

2.) Amazon is more than willing to dump below cost to gain share, and has a long track record of doing so.

3.) Apple’s competitors have frequently complained that they can’t match Apple on price in the tablet space.

4.) Just like the Kindle Fire, every other tablet anywhere near this price point has been a case study in compromise and corner-cutting.

5.) To repeat myself, if anyone else (other than Apple) could meet the Nexus 7 on quality and specs, they would have done so.

Ergo: There are no margins on this thing.

I can’t think of any rational argument to the contrary.

And that’s OK. As I noted in the comments above, it’s well worth it to Google to subsidize this thing (and selling it at cost is subsidizing it). It’s absolutely the right thing to do.

MacFrogger

Brian said:

Amazon is known for selling things at razor thin margins.

They are even known for selling razors at thin margins!  wink

MacFrogger

MelIal said:

That said, the Nexus 7 is an impressive amount of bang for the buck, but it looks like Google has completely knifed all other Android tablet manufacturers in the back big time.

Bosco replied:

Why do you think this? Google has simply shown the OEMs where Google thinks the sweet spot is.

Based on what we now know from the All Things D article cited above, I have two questions I would love to see some enterprising reporter ask Andy, Sergei, Eric et al:

1. Will Google Play sell other OEM tablets running Android at cost?  (e.g. without Google taking its typical cut)

2. Will Google similarly lend a hand in paying the marketing costs for other OEM tablets - or only for Asus?

If the answer to both of those questions is “No”, then I’m afraid I’m in agreement with MelIal. As Brian points out, I’m not saying there isn’t a big upside for Google in approaching their tablet problem in this manner, but how the heck can other OEMs compete with an OEM selling a product at or close to cost with the added benefits of paying no commission to the seller (when bought through Play) who’s also on the receiving end of a free marketing campaign?  No one will convince me that other OEMs that are either currently or planning to make Android tablets aren’t really pissed off…

Bosco (Brad Hutchings)

Hi MacFrogger. You are certainly correct about Samsung. Google is selling the HSPA+version of their remarkable Galaxy Nexus phone for $349.00 (unsubsidized by carriers) on Google Play! I bet Samsung is livid.

OK, so a hint to you guys… When you understand Googles business model and how it cultivates its market, then your critiques will make sense. Until then, it’s kinda entertaining watching you watch the world through 6 colored glasses. (Google is not Apple.)

Steven

There?s a lot of reasons people buy Apple hardware, and it?s not just for the hardware. When Google can supply what Apple does for a similar device you can compare pricing. Apple?s system of apps, integration with their other devices, their tightly controlled hardware-software integration makes the product worth more. Yes, you can do many similar things on these devices, but the reason people buy Apple products is that they?re very high quality, rock solid, and don?t break. They have more apps that do more things, and they don?t break each other.

Let me know when Apple’s products can do widgets.  Let me know if you haven’t ever had an iOS App crash.  Let me know when I don’t have to use iTunes for everything.

Don’t get me wrong, Apple makes life simple for some people.  But for some with a little bit of technical knowledge, I want more control.  I can get that with Android.  In fact, many ways, I can do more on Android.  What most people iFolks don’t realize is that much of what Apple tries to add and integrate was done by 3rd party apps or Google itself first.

Paul Goodwin

Steven. I agree wholeheartedly that more control is good for the tech savvy population. I too wish iOS was more OS X like on my iPad. But for even us reasonable savvy folks, when I buy an app for $0.99 from the App store just to try,  I know it won’t take my iPad down. With the extra control and not so stringent requirements and organization comes penalties. Ease of use suffers.  Problems occur that are not solvable by the average user and itdrives them crazy. It’s a trade off- stability versus more knobs. We like all the knobs ... It’s fun.

Paul Goodwin

The sweet spot is an interesting concept. Running a business on slim margins is an endless cycle of despair. Something always happens and you end up losing money. I have personal experience with that. Then some one comes along and undercuts you. It’s then a war of who has the biggest bankroll to fund the loss period. Then before you know it, you haven’t made money for multiple quarters. You try to control costs but you’re at the mercy of many suppliers. Just look at who the players are in the PC business compared to 10-15 years ago. The good guys many times get pushed out by subsidizers with deep pockets. If the quality is there and stays there, it’ll fly and eventually they may be able to make money on these. But long term quality isn’t cheap.

archimedes

“I’ve seen things you people wouldn’t believe. Attack ships on fire off the shoulder of Orion; I watched C-beams glitter in the dark near the Tannhauser Gate. All those moments will be lost in time, like tears in rain.”

Shaiy007

Best article I’ve read yet on the Nexus 7! Good job!

RonMacGuy

Ergo: There are no margins on this thing.

Bryan, you forgot 6.) Apple continues to command huge margins and if/when they release a smaller iPad they will, once again, command huge margins and will eat the competition.

But alas Bosco, I?m a creature of the business world, and quite frankly one has to figure out how to do this in a way that provides a profit.

MacFrogger, you and me both. Amazing how some here don’t see it the same way.

Until then, it?s kinda entertaining watching you watch the world through 6 colored glasses.

Ah yes, the continued immature Apple bashing to elicit emotional response and to redirect away from relevant discussion.  So sad that this has to continue…

Simple economics here.  Apple makes huge margins on selling entire ecosystem.  Google makes huge money selling advertising.  All the rest who make products that run android are struggling to compete in a razor thin margin environment.

Bosco (Brad Hutchings)

Acer, ASUS, and the like know how to survive and thrive on margins that are much lower than Apple’s. Even HP and Dell have done well enough long term with lower margins than Apple. The real question you should ask is whether Apple can compete on price with lower margins if the market makes it do that.

Here’s an article from last November claiming that Acer, ASUS, and Dell would withdraw from the Android table market and just wait for Microsoft. Right about Dell, but very wrong about Acer and ASUS.

Acer and ASUS rose to prominence on dirt cheap netbooks. The margins are definitely not in the lowest end models, but in the slightly beefier ones. It’s not a loss-leader model, but one that relies on buyer psychology. Just as most freeway drivers pick a favorite lane from left to right, buyers tend to slot themselves into lowest, medium, and high end choices for essentially the same base product, and the profitability of a line is a function of that slotting. That’s how sales works, folks.

RonMacGuy

Acer, ASUS, and the like know how to survive and thrive on margins that are much lower than Apple?s.

Wait a sec, is that ‘survive’ or is that ‘thrive’?  I believe the survive comment, but not necessarily the thrive one.  But granted I haven’t really looked at their financials.

Even HP and Dell have done well enough long term with lower margins than Apple.

‘Done well enough’ - again, simply surviving is not great from an investor perspective, is it?  Dell stock 2007: $30 a share.  Dell stock 2012: $12 a share.  Sure, nice to have access to low-end stuff (I do own an older Dell at home and use one at work as well) but not good from a shareholder perspective.  But it’s all what you’re looking for I guess.

The real question you should ask is whether Apple can compete on price with lower margins if the market makes it do that.

You’re really asking this?  Hmm.  Apple stock 2007: Under $200.  Apple stock 2012:  $584 today.  My answer is, TRICK QUESTION - the market doesn’t ‘make’ any company do anything.  Apple makes its own markets, and has proven time and time again that it can compete on price with higher margins.  Or, I guess I could take a different approach on answering your question.  Yes, Apple can and does compete on price (but with higher margins) if the market makes it do that.  Good example?  iPad.  Enough said.  What price did Xoom come out at?  Everyone criticized Apple for high pricing, yet the competition was in line or higher with their ~10” introductions.  But, I’ll stick with my first answer…

That?s how sales works, folks.

Hmm, strange ‘education’ in that last paragraph.  But whatever floats your boat.  At best I would say that what you said is how some sales works.

paikinho

I think all companies struggle to find the sweet spot where they can make money and thrive. Some do it others do not.
One thing about business is that it is never static.

All companies seek to reach the pinnacle of profitability that Apple has.

I doubt anyone skimming along with narrow margins finds that to be the sweet spot…. they will all seek to increase revenue flow and margins.

As far as low margins, Apple currently doesn’t need to depend on competing at low margins. So they can have low margin products and stay in the market without worrying that it impacts their larger revenue streams… hence they can compete really well in the low margin world if they choose to put some effort there.
They do just that with their mini-ipods…. not much profit, but they do make some and continue to sell well in the lower end world of consumer electronics. It just isn’t much of a bump to their baseline.

Bosco (Brad Hutchings)

ASUS Q2 2011 net earnings 5%, operating profit margin 5.9%. Highest in 3 years. They have been a true leader in the netbook game. Oh, and profits buoyed by the Transformer, a high-end, higher margin tablet.

All I am saying guys is that this is a realistic, indeed “thriving” level of profits. Really. This is an investment that is worth their time and their investors’ money. It’s taking nothing away from Apple’s phenomenal margins. More power to Apple for continually sucking money out of its customers!! Bottom line is that a product like Nexus 7 is worth doing, and I doubt it requires a Google subsidy, including the special branding and marketing it gets as a Nexus flagship.

paikinho

“All I am saying guys is that this is a realistic, indeed ?thriving? level of profits. Really. This is an investment that is worth their time and their investors? money.”

Yep

And I doubt it requires a subsidy either… perhaps, but I don’t think so in this case.

paikinho

A 7” iPad would do really well even at a $250.

1. The market is already large so it would help drive sales on a stable platform that has the biggest name recognition.

2. There would be a lot of buzz and a cheaper smaller iPad would open the iPad world up to a much larger group of consumers. I think it would actually outsell its bigger brothers by quite a bit.

3. It would be the hottest thing for any xmas season if or when it comes.

4. profit margins wouldn’t be that high and it would cannibalize the higher profit margin current iPads…. perhaps that is why Apple wouldn’t choose to release one now. But it would open up a new and bulkier consumer segment so perhaps that would offset things.

People wiser than me and with more information do this kind of analysis all the time for all of the companies.

Paul Goodwin

I’d say this device is being subsidized to the tune of 75% or more.. And most of the non-Apple computer companies are barely surviving….heck they can’t make up their mind whether to stay in the hardware busines. ASUS is more than likely subsidized by the Taiwanese gov’t (or now Google). The costs of a 7 inch tablet aren’t that much lower than the costs of a 10 inch.. Apple’s competitors in the tablet world would have priced their product far lower than they did if they could have. They couldn’t. This tablet’s costs are very likely 75% or more than the costs of an iPad. They all are realizing that the ONLY way they can do anything in the tablet market is to practically give them away for the short term.

Selden

Since this was originally posted, manufacturing cost to Google has been estimated at $184 per device. If the only Nexus were the 8gb model, this argument might carry weight, but www.nexustablets.net has a poll that suggests that 3 times as many buyers are ordering the 16gb version. Assuming that the manufacturing cost is identical for the two devices, and that the extra 8gb adds $5 to the component cost, Google would be making about $60 per device. Split that difference between the two models and (if my math is correct) you end up with an average profit of $45. Reportedly, the first production run is 600,000 units, which works out to $27 million profit. Granted, that’s little more than a rounding error in Google’s overall financial picture, but that’s just to start.

Bosco (Brad Hutchings)

That is how it’s done, Seldon. Good work. Funny how a few days usually yields the information needed to make sense of things.

Paul Goodwin

Mfg costs aren’t all the costs they have to recoup. Development, distribution, and advertising costs alone will wipe out their tiny margin. They are giving these away at less than true cost to gain market share. The only question is for how long will they be able to afford it.

MelIal

Except for the fact that estimated $184 only covers components and assembly.

There’s a few other little things like development costs, advertising, distribution costs, dealer margin (when sold thru resellers such as Gamestop) etc that have an impact of whether a manufacturer actually makes an actual profit.

Alex

With the nexus 7 leading the charge in the tablet world, how well does it compare to the others in terms of reggedness. I will be deploying soon and have heard that the Fire tends to fall apart over a 7 month deploymet. Any insight on how will the Nexus will hold up while taking a pounding?

Bryan Chaffin

Alex, I couldn’t recommend the Fire at this point, especially on deployment. I think the Nexus 7 is better built, but I’ve only handled one for a few minutes. So while it’s definitely better built, but I don’t know one way or another if it could handle deployment. Anyone else have more practical experience with it?

The Nexus 7 is also a way better tablet than the Fire by many orders of magnitude in terms of functionality, in my opinion.

GL on your deployment. If you can hold out for Apple’s iPad mini, I think it likely that it could handle the rigors of deployment better than competing devices.

james peartree

GUESSING GAME: WHAT’S MY TABLET BRAND?:Let’s broaden what we call consumption and so form a more balanced opinion on the diverse tablets. In the last 24 hours, I ..... jogged 6.42 km on the beach at low tide while the tablet coached me, storing path and numbers on a satellite map of our area. During that jog I listened to an audiobook by Sam Kean along with a chosen background of piano music. Halfway through I saw many new cranes in the estuary and filmed them to post on a blog I do for our retirement community. ...Stopped later at a coffeeshop with wi-fi, read the news and my emails, posted cranes on YouTube and embedded with music into Blogger page… Discovered online a small mirror that clips on to my tablet and allows it to shoot forward instead of front. My tablet does not have a rear camera so I bought it. All this took 25 minutes and I went home to my PC, loaded all of Duke Ellington collection to the tablet plus a movie for later. Then I went to the living-room with tablet and videoSkyped my sister in Canada and then bought plane tickets for a family reunion. The fellow on TV was saying something outrageously false about my candidate. So I started the dictation widget on the tablet. When dictation fully typed him out, I put quotes around what he was saying and appended my own comments, dictated also after shutting down the TV sound . I posted this in another blog I do, along with a photo of the fellow I took without interrupting the dictation process. The tablet had a funny distorting app and I used it on part of the photo. Then I played a game with amazing 3D animation, holding the tablet as you would a steering wheel, and finally went to work outside while entertained with Quebec radio station about their recent election results. The tablet was in my shirt pocket. I live on the Baja coast. While driving to the grocery store, three times over the tablet read out loud a complicated recipe. My hands never left the steering wheel and I shopped for all the right ingredients. That night I watched the movie in bed after which I noticed a bright star near a super-bright moon. I immediately aimed the tablet at the window and an app showed me that exact part of the sky with a name attached to each celestial object (it was no star, but planet Jupiter). I noticed a Messier galaxy to be visible so I got up and joined a gang of amateurs on a video hangout site, each with a telescope pointing somewhere. I asked one to show me Messier 111 and he obliged, unshaved and tethered to a coffee cup. Woke up early and read bout the new Kindle Fire HD and dictated this comment, put the first sentence in all-caps and voila! WHAT’S HER NAME? (the tablet) Hint: It cost me the price of two and a half tanks of gas on my crappy SUV)

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