It wasn’t a secret that Google was going to announce a 7-inch Nexus tablet made by Asus and running Nvidia’s Tegra 3 chipset. And announce it Google did yesterday to much applause and fan fare. As we and a great many anticipated the tablet is designed as pure media tablet rather than a general purpose tablet like the iPad. As we watched the demo it became clear the Nexus 7 is targeted right at the Kindle Fire and nothing else.
I have been thinking a lot about what Android’s future in tablets may hold and I believe we now have the answer. Android’s sweet spot for tablets may be 7-inch pure media and entertainment slates. These devices will be built and optimized specifically with entertainment not productivity in mind. They will also be very low cost and derive a significant amount of value from cloud services. This also fits right in line with Google branding their store “Play.”
This makes sense if you think about the fact that the most successful Android tablet to date, the Kindle Fire, is a 7-inch pure media tablet. With the iPad, and now on the eve of Windows 8 tablets all targeting the 9.7 to 10.1 tablet screen sizes with more general purpose tablet strategies, I anticipate the larger screen Android tablets to struggle.
Android has struggled as a tablet solution in the general purpose segment due to the immature nature of Google’s tablet ecosystem. Apple remains dominant in this area and it seems like many firms strategies are to avoid competing with Apple entirely. This is clearly the direction Google is taking with the Nexus 7.
With that context I want to point out two areas important for this segment. One that favors Amazon and one that favors the Nexus 7.
Cloud Services and Consumer Trust
The Kindle Fire commerce ecosystem both in terms of digital media and consumers trust in Amazon as a commerce vendor are key areas where Amazon has an advantage of the Google right now. Amazon has over 100 million credit cards of consumers on file who all trust Amazon as a vendor. I don’t believe Google has released how many accounts they hold but I guarantee you it isn’t nearly as many as Amazon, or Apple for that matter.
Amazon has a more mature ecosystem when it comes to digital media and consumer trust for commerce. This is an area Google is attempting to strengthen with the Nexus 7. During the announcement of the Nexus 7 the statement kept being made that the device was built for the Google Play store. Google is clearly hoping that this device will generate more trust for their commerce platform and strengthen their commerce ecosystem.
This is an area where Google 7″ tablets may have an advantage over the Kindle Fire. Google has not yet stated when or if the Nexus 7 will ever appear in retail but you know other OEM will come out with 7″ media tablets who will get them in retail.
Retailers have been understandably conscience of Amazon’s commerce strategy with the Fire being potentially disruptive to their own brick and mortar store strategy. If that trend continues you can imagine more retailers not carrying the Kindle Fire and filling that hole with other OEMs Android 7″ media tablets.
To the extent that retail will be important for this segment the advantage goes to Google in this area.
I am not sure the extent the tablet market is ready to segment into specialty tablets but if they keep their prices low and overall time investment low then I think they have a chance to become companion media devices.
Of course if Apple jumps into this segment with a 7″ tablet I will have to re-consider some positions I am taking currently. However, if Apple does this it will only validate the 7″ media tablet segment at which point I would expect OEM investments in the category to ramp extremely quickly.
7 thoughts on “Android’s 7-Inch Tablet Future”
Ben, are you saying the Nexus 7 may eventually allow purchases from Target, Walmart, Walgreen, Macy’s, etc.?
No just that more retail stores will carry 7″ devices that are not the Kindle Fire. Google teaming up with brick and mortar is an interesting idea though.
First, Google has just ceded the 10 inch tablet market to Apple. With the addition of the Windows RT and Windows 8 tablets coming out this Fall, don’t be surprised if 10 inch Android tablets are swept from the marketplace this holiday quarter.
Second, what matters most is not the tablet but the business model. Google is selling a tablet at near or below cost. That only works if you make it up in the sale of content. Amazon is arguably the finest on-line retail store in the world and they only have 4% margins. How Google expects to make up for their losses on the tablet with sales from Google Play is beyond me.
To be fair, Google may be intending to make the money up by using advertising. That is their forte. So far, Google’s attempts to make money from Android have been, at best, dissapointing. Perhaps tablets are the sweet spot that will finally allow Google’s advertising prowess to thrive.
This is a great article and reply combination.
Looking at the launch of Nexus 7 from outside the US makes it seem like all the Nexus 7 is to Google, is of way to win back the around 2 million Kindle Fire users.
The US is a big marked, but by focusing so much on content that is unavailable outside the US Google is limiting the overall success of the Nexus 7 product.
If Google truly is abandoning the tablet marked for a pure search and content strategy I believe that they will lose a lot of momentum on Android. With both Apple and Microsoft making it all about the complete eco-system Google will end up losing hardware partners do to the lack of eco-system to build around. I find it hard to believe that Google can stay in the mobile OS marked with only Android. Customers want to do more than just view, read and listen and they don’t want to carry around to many devices. Apple and Microsoft have shown the customer that you can have fewer devices. I don’t see the customer adding a Google device to that mix.
“If Google truly is abandoning the tablet marked for a pure search and content strategy I believe that they will lose a lot of momentum on Android.”-Lars
Good post, Lars. I made a similar argument here at tech.opinions a couple of weeks ago. My contention was that to remain a major personal computing platform, one thee all three “legs” of the stool – phone, tablet and desktop. Apple is there already. Microsoft is making their play this Fall. Google is not even trying. Not only don’t they have a desktop Android offering, but they seem to be regressing in tablets as well.
The Nexus 7 Tablet may well play to Google’s strengths. But it may also expose a long-term strategic weakness.
Without some other strategy, advertising for one, I can’t see how Google is going to make any money from their 7 inch tablet. endeavour. I was surprised that Google outsourced the physical product and wonder if they will ever really use the Moto purchase? Selling the Nexus 7 through retailers might only work if the retailers feel such would harm Amazon, as you have said. Retailers would be doing the Apple dance taking only minor profits from the sales and relying upon third party add ons to make any money. Isn’t Google relegating the responsibility and the costs to other OEMs who will be making piddling profits, if any, from their efforts? Where is the extra profits for OEM investment and development or will all that be left to Google?
Ben, I wonder what would happen if Apple does come out with a 7 inch iPad this fall? If it did bring out a competitively priced mini pad at or near $200, wouldn’t that crush the opposition? What about a five inch iPod touch for $200 and then market an iPad 7 inch for $300. Possibly dropping the pricing of the 9 inch iPads by fifty to a hundred dollars might be a possible strategy. Apple does have the bank account to fight the good fight.
There are many scenarios I am sure Apple is toying with. I am sure Apple has learned some lessons from its iPhone experience. What about a world iPhone that is cheap and available both with and without contracts to compete in the lower end of the market?
If the OEMs come up with a winning strategy with their 7 inch tablets, wouldn’t it be likely that a larger tablet at very competitive pricing might be in their scope?
We are living in difficult times with shrinking personal resources and it is being predicted that the times won’t be a changing any time too soon. Maybe it is time Apple figured out a way to embrace the less fortunate into their world. Apple succeeded in doing this with the iPod family.