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Nexus 7 Begins Google's Ruthless Partner Cull

Gordon Kelly

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Nexus 7 Begins Google's Ruthless Partner Cull

They thought the threat would come from Motorola. Bought for $12.5bn, Google had acquired a hardware giant yet claimed the deal was purely for patents. Nine months later the deal was concluded and within five weeks Google launched a high spec, budget tablet sold at cost and with a four month period of exclusivity for its latest Android 4.1 operating system. Everything Android partners feared had come true, except for the fact the tablet was made by Asus…

Unlike Google's previous Nexus smartphones, the 'Nexus 7' tablet isn't a concept or a guide. It is a ruthlessly priced land grab, a housecleaning exercise designed to eradicate smaller, less significant partners who have up to now produced bargain basement, low quality hardware which has given Android tablets a bad name.

Google Nexus 7

Interestingly the move was not the realisation of a carefully worked master plan – it was an act of desperation. "We went from zero to working product in four months," admits Google's head of Android, Andy Rubin. " The exec had previously admitted Android tablet sales were "less than I'd expect them to be if you really want to win" and that the key is app support. "I can't force someone to write a tablet app," he said, "[developers are] looking at market share and... being frugal."

The Nexus 7 is Google's answer to the problem of market share. It demanded a high end 7in tablet which must not cost over $200 and set Asus to work. "Our engineers told me it is like torture," said Asus' chairman Jonney Shih. "They [Google] ask a lot." The kickback for Asus is Google will absorb all marketing costs. How will partners compete? There is "plenty of room left for Android tablet innovation" Rubin told All Things D.

Android Jelly Bean

This is a somewhat hollow answer to a move which will cripple a large number of partners. As we commented in our recent reviews of the £150 Disgo Tablet 8104 and £180 9104, the Nexus 7 has effectively rendered them obsolete. With the iPad flourishing and Windows 8 RT on the horizon Google clearly decided such casualties of war were more desirable than continued stagnation and fragmentation. High Nexus 7 sales will attract punters and subsequently developers, all the while substantially raising the bar for all tablet makers to a do or die level.

ElectricSheep

July 5, 2012, 7:35 pm

Good little article, I agree with. I'm just amazed how slowly Apple's competitors have been in reacting to the obvious notion that the market wants value added, high quality (user upgradable, in future) hardware, coupled with deeply integrated, well supported and intuitive software.

An iPad & iPhone iOS - Nexus Android - Surface W8+ future, with superb quality, competing hardware is very encouraging. Apple have shown the software business model works, people pay good money for good software. Android is playing catch up and Microsoft, well, that's anyone's guess - they are their own worse enemy.

Although the Nexus 7 is a land grab for an expanded Google Play market, it does also show that high quality products can be produced on a budget and developed & launched to market on a very short lead time. And although i'm sure profit margins on the hardware are reportedly tight - they are still making a profit on the hardware, much bigger profits will follow in the purchasing of Play apps. (Printer - Ink model).

I will be surprised if Apple don't start to see their ability to charge huge premiums for their mobile products, beginning to dissolve in coming years as the competition gets its act together, in which case, it will need a modified business model to the current approach. As Gordon says, Google getting rid of the 'lower end' partners is a good start in adding polish & perceived value to the brand - as long as the products are high quality and well supported.

Of course, this move will also begin to help bring under control the 'fragmentation' effect suffered by the many android products on the market. Long over due!

Daniel Gerson

July 5, 2012, 9:51 pm

Really great article Gordon! You nailed it, and I learned something new.
(which often doesn't happen).
Loved the opening paragraph bait and switch.

Bugblatter

July 6, 2012, 5:26 am

What you say is true but misses the biggest reason Google did this: the Kindle Fire.

Google makes no money directly from Android; it makes its money from Google Play.

Amazon threatened that model by using Android but integrating its own store.

Google had to close that down, which it has now done very thoroughly, at least for now. However Amazon's no doubt got one or two things up its sleeve...

If Amazon does launch a 10" Kindle Fire then Google will release a Nexus 10 roughly four months after Amazon's announcement, unless they're already working on it.

funmat

July 6, 2012, 2:57 pm

I think a more accurate take on the Nexus 7 is that it was produced to directly combat the kindle fire and the Amazon store - it matches the kindle on price and offers all the google play store as an alternative. I still think that at a price of £160 + delivery it isnt quite a budget killing device as you can buy 7" cheap tablets for £50 now - many of them with micro SD Card support. If google produced a 10" tablet with expandable storage at close to this price point it only then would it really shake up the tablet market

Gordon394

July 6, 2012, 7:34 pm

@Bugblatter and funmat - thanks for the comments guys, the Amazon Kindle Fire point is a good one, but for me not the main issue.

Amazon, Samsung, Acer, etc have the size to potentially compete with the Nexus 7. This is a primary strike at the smaller partners with cheap, low quality hardware. Google is looking to boost Android's reputation on tablets and if it spurs Amazon to produce a better Kindle (the existing Fire is arguably exactly the low quality, single core, outdated Android OS that Google wants rid of) then Google has achieved its aim.

Whether Google then goes to the next stage and wants to eliminate bigger, high quality partners is debatable - there seems little point to that - but it will be interesting to see...

Peter Morris

July 9, 2012, 3:20 pm

Frankly, Gordon, your excellent writing is pretty much the only thing that keeps me coming back to TR. Of course, some of your colleagues are solid (Ed in particular, who deserves his new position) but one or two are massively defensive when responding to reader feedback. That,with the move towards the reporting of rumours (especially in the IOS world) and the effing awful popups that plague iPad reading mean I am going elsewhere far more than I used to.

Please keep up the good work but, if anyone at TR cares, I believe things are getting worse lately.

Anyway, I look forward to more of you articles - where else do you write for?

ElectricSheep

July 10, 2012, 3:53 am

Total agreement with Peter. Gordon's articles have always informed and often entertained, without his input this would site would lose a shed-load of it's (already heavily diminished) appeal. That's enough smoke blowing in 2012 for Gordon! I hope TR's doesn't do a Nokia or a RIM.

I briefly changed browsers the other day to one that didn't have adblocker installed and it's very distracting. I'm very surprised that there's been no full Nexus 7 review yet... inexplicably slow on that one considering you were at the Google I/O conference. Did someone lose the freebies?!

LetsGo

July 10, 2012, 1:30 pm

Gordon you do know that Jelly Beans Source Code should be released today?

And calling low cost Android tablet makers partners is a bit rich more like free loaders, a lot of them don't even have Google Play access.

I think the design of this tablet was more to fend off Amazon, the lack of Micro SD points to this theory.

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