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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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RE: Pricing scheme
By chimto on 7/23/2012 5:20:22 PM , Rating: 2
I was wondering about the pricing myself. Can someone clarify this? What is ASUS getting out of this. Why would they manufacture something for nothing. I understand why Google would sell at cost. They gain by building Android market share and through ads.

I would guess that ASUS is making something off each tablet. So if ASUS can do it, I would think other manufacturers could build and sell tablets in this price range and make a profit also. Anybody know?

RE: Pricing scheme
By SPOOFE on 7/23/2012 5:57:11 PM , Rating: 5
What is ASUS getting out of this. Why would they manufacture something for nothing.

My assumption was that "at cost" meant that Google wasn't profiting off the device, ie - they're selling it for what Google pays Asus for making it. Asus could still be making a profit off of Google.

RE: Pricing scheme
By sprockkets on 7/23/2012 7:11:03 PM , Rating: 2
Even before Google got involved they were going to sell it for $250 anyhow.

RE: Pricing scheme
By Samus on 7/24/2012 1:31:54 AM , Rating: 4
The psyche of most Apple iPad/Macbook owners, at least those with wealth, is to always purchase top of the line.

I know many people who will settle for nothing less than the $900 64GB iPhone 4S, $2000 Macbook Air w/ 256GB SSD + Applecare, and of course the $800 iPad 64GB + LTE, even though they will be unlikely to use 1/10th of that storage space because all they are buying them for is surfing, emailing, watching their investments, and finding new ways to spend money.

This is a market everyone wishes they had, but only Apple ever will have. It takes an insane level of chic exclusivity, presentation of wealth and of course brainwashing/believing the hype/following the lemmings off the bridge that only Apple will ever be disturbed enough to accomplish.

The $64,000 is, after all, how do you actually one-up Apple to appeal to their customers. So far, amazingly, no corporation is conceeded enough to even step up to the plate.

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