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At cost tablet is so popular ASUSTek is upping production

While the Galaxy Tab 10.1 from Samsung Electronics Comp., Ltd. (KSC:005930) saw some modest international sales success, no Android tablet to date has truly challenged market dominator Apple, Inc. (AAPL), unless you count, Inc.'s (AMZN) quasi-Android Kindle Fire.

Google Inc.'s (GOOG) new Nexus 7 tablet runs the main-line Android release -- specifically Android 4.1 "Jelly Bean" -- unlike the Kindle Fire, which runs Amazon's own special fork of Android.  But the tablets do share a common price -- $199 USD for the 8 GB Nexus 7.

Now they share something else -- the Nexus 7 appears to be the first pure-Android tablet to be a market-moving hit.

Google reports that despite demand for the 8 GB variant being soft, it is seeing wild demand for the 16 GB version that retails for a modest $249 USD.    The tablets are reportedly sold at cost, which may be part of their strong appeal.

The sales success of the higher-storage variant is unusual, given that competitors like Research in Motion, Ltd. (TSE:RIM) have typically seen their highest sales with the cheaper lower-storage models.  In fact, the success took Google by surprise and the company has now been forced to put sales of the popular 16 GB model on hiatus, as it struggles to catch up with a back-log of orders in the U.S. and UK.

Nexus 7

The company now lists the 16 GB model as "coming soon", offering hopeful buyers the chance to sign up for an email alert when more stock becomes available.

Announced June 27, the tablet's hardware is produced by Taiwanese computer maker ASUSTek Computer Inc. (TPE:2357).  The tablet packs a Tegra 3 quad-core CPU from NVIDIA Corp. (NVDA).  It is primarily available through the Google Play store, but was also picked up by several major U.S. and UK retailers late last month.

The tablet has reportedly sold out at many of its U.S. partners' stores.  ASUSTek is upping production, but it may be weeks before customers can get their hands on the hot tablet.

The success of the 7-inch Kindle Fire, and now the Nexus 7 have reportedly alarmed Apple who is reportedly feeling pressure to release a "mini-iPad" early than planned.

Before his death CEO Steven Jobs vetoed such a design, insisting it would be a market failure.  In one of his numerous rants in his waning years, he commented:

The reason we wouldn't make a 7-inch tablet isn't because we don't want to hit a price point, it's because we don't think you can make a great tablet with a 7-inch screen.  The 7-inch tablets are tweeners, too big to compete with a smartphone and too small to compete with an iPad.  [Increasing screen resolution on small devices is] meaningless, unless your tablet also includes sandpaper, so that the user can sand down their fingers to around one quarter of the present size.

Well the success of its rivals reportedly has Apple prepared to tell its legion of loyal followers to get the sandpaper out and ready their fingers for a mini-iPad.

Sources: Google Play, The Guardian

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Double Edged Sword
By KPOM1 on 7/23/2012 3:49:55 PM , Rating: 3
It looks like Google found a formula for Android that works. However, it is a double-edged sword for Android manufacturers. They can move lots of stock at $250 or below, but likely can't make much money on it. Google doesn't care, since they make their money elsewhere (as does Amazon). However, I'm not sure Samsung et. al. want to give away their devices. Samsung figured out how to make an Android phone at a high-end and profitable price point, and I'm sure they'd rather be competing at Apple's price point rather than Amazon's.

It will be interesting to see what happens if Apple really does release an 8" iPad.

RE: Double Edged Sword
By The Raven on 7/23/12, Rating: 0
RE: Double Edged Sword
By bupkus on 7/24/2012 6:35:08 AM , Rating: 2
If they would raise the price ~$50-100 for better quality control then I'd gladly get one.
I too would gladly pay more for a properly screwed tablet. Huh...????

RE: Double Edged Sword
By The Raven on 7/24/2012 2:29:11 PM , Rating: 3,2817,2407422,

What I mean is that from what I hear around the web is that they cut corners. If it costs an extra ~$50-100 for them to make sure those corners aren't cut, then I would jump. I don't want something that bricks out after a year.

I mean I appreciate what they are doing making tabs affordable for people poorer than I, but I also like options that are somewhere in between this and overpriced Apple stuff.

RE: Double Edged Sword
By MadMan007 on 7/23/2012 4:36:05 PM , Rating: 1
Samsung's 7" tablets are comparably priced when accounting for features.

RE: Double Edged Sword
By kreedaz on 7/23/2012 5:18:20 PM , Rating: 2
The "At cost" refers to Google, not the hardware vendor. "At Cost", to the hardware vendor in this case means they make money. They tell Google it will cost 249 dollars to make a Nexus 7. this 249 price includes the hardware vendor profit margin. If Google turns around and sells the tablet for $1000 or $100 dollars, the hardware vendor does not get any more money, nor do they have to give money back (in the event Google sold for less than 249.)

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