Google's $199 Nexus tablet may pressure vendors to cut prices
It is widely believed that Google will entere the tablet market in 2012 with an own-branded 7-inch Android tablet. The search giant has reportedly partnered with ASUS to build a $199 device that will compete against Amazon's Kindle Fire.
Context & Ripple Effects
Reports of a Google-branded 7-inch Android device have circulated since January as a product meant to undercut Amazon’s Kindle Fire. A March 16 report put the rumored price as low as $149, making the $199 figure a more defined version of the same low-price positioning.
The reported ASUS partnership would give Google a hardware route into tablets while putting the proposed device directly against Amazon’s Kindle Fire. The account remains unconfirmed: both the partnership and price are reported plans, not announced products.
First-order effects
- If the reported $199 launch materializes, Google and ASUS would enter the 7-inch tablet segment with a price positioned against Amazon’s Kindle Fire.
- Amazon and other tablet vendors would face immediate pressure to defend entry-level pricing rather than compete only on specifications.
Second-order effects
- A lower Google reference price would make vendor margins and component costs more consequential for Android tablet makers trying to match the segment.
- ASUS would gain visibility as Google’s reported hardware partner, while Amazon would need to preserve the Kindle Fire’s value proposition at the same price point.
Third-order effects
- If low-priced, branded Android tablets become a repeatable strategy, the 7-inch category may organize around platform-backed pricing rather than hardware vendors’ standalone margins.
The trend: The rumored Nexus device is one sign that 7-inch tablets are becoming a price-led contest between platform owners and their hardware partners.