When Google announced their Nexus 7 tablet, they revealed that they were not making any money on the device, and we had previously heard that the manufacturing costs of their new Android 4.1 Jelly Bean tablet were close to the $199.99 retail price for the 8GB model.
We had previously heard that Google may even be making a loss on the device, as it ships with a $25 gift card for the Google Play Store but according to a recent report from All Things D, who spoke to iSuppli, the Google Nexus 7 tablet is estimated to cost around $152 to manufacture.
This would mean that whilst Google are not making any profit on the device they are not actually making a loss on the 8GB model, on the 16GB model they could be making a small profit as this is apparently $7 more expensive to make than the 8GB model, so they cost would be $159 and the device retails for $249.99.
Google’s Strategy with the Nexus 7
Google’s approach with the Nexus 7 tablet appears to be more about gaining market share and less about immediate profitability. By pricing the device competitively, Google aims to attract a larger user base to its ecosystem. The inclusion of a $25 gift card for the Google Play Store is a strategic move to encourage users to explore and purchase apps, games, and other digital content, thereby increasing engagement with Google’s services. This strategy is not uncommon in the tech industry; companies often sell hardware at or near cost to drive software and service sales, which typically have higher profit margins.
Comparative Analysis with Competitors
When comparing the Nexus 7 to other tablets in the market, it’s clear that Google was aiming to disrupt the status quo. At the time of its release, the Nexus 7 was positioned against devices like the Amazon Kindle Fire and the Apple iPad. The Kindle Fire, which also sold at a low price point, was Amazon’s attempt to get more users into its ecosystem, much like Google’s strategy with the Nexus 7. On the other hand, Apple’s iPad was priced significantly higher, but it offered a more premium experience and a well-established app ecosystem.
The Nexus 7’s competitive pricing and solid hardware specifications made it an attractive option for consumers looking for a budget-friendly yet capable tablet. The device featured a 7-inch display, a quad-core processor, and the latest version of Android, making it a compelling choice for tech enthusiasts and casual users alike.
Long-Term Implications for Google
The long-term implications of Google’s strategy with the Nexus 7 are significant. By getting more users into its ecosystem, Google can collect valuable data, which can be used to improve its services and target advertisements more effectively. Additionally, a larger user base means more potential customers for Google’s various services, such as Google Play Music, Google Play Movies, and Google Books.
Moreover, the Nexus 7 helped set a precedent for future Android tablets. It demonstrated that it was possible to offer a high-quality device at an affordable price, which likely influenced other manufacturers to adopt similar pricing strategies. This, in turn, helped to drive down the cost of tablets across the industry, making them more accessible to a broader audience.
In conclusion, while Google may not have made a significant profit from the Nexus 7 tablet itself, the device played a crucial role in expanding its ecosystem and setting the stage for future innovations. By prioritizing market share and user engagement over immediate profitability, Google positioned itself for long-term success in the highly competitive tablet market.
Source
Latest Geeky Gadgets Deals
Disclosure: Some of our articles include affiliate links. If you buy something through one of these links, Geeky Gadgets may earn an affiliate commission. Learn about our Disclosure Policy.
