

What is Google Nexus 7's Business Model? - raganesh
http://www.slate.com/articles/technology/technology/2012/06/google_nexus_7_tablet_steve_jobs_was_wrong_smaller_tablets_aren_t_completely_worthless_.html

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slykat
I cringed a bit when the article mentioned that physical goods built the
business case for Amazon selling the Fire at cost. I find it very difficult to
believe that Amazon was banking on Fire customers purchasing significantly
more physical goods; by that same logic, Amazon should get into the laptop
business - do you see that happening?

More realistically, Amazon quickly realized that the tablet is largely a
consumption device for high margin content. The lack of a keyboard and touch,
along with other design differences, makes the tablet relevant for
consumption. Also, Amazon wouldn't have built a closed app and content store
system if they thought that physical goods would be the bulk of the business
case.

The Fire is part of Amazon's push to ensure that as virtual content sales
explode, they get the bulk of the pie.

This is exactly why Google has built the Nexus 7 - to get on the bandwagon for
virtual content. If they sell a lot of Nexus 7s - they will definitely be
upping their content portfolio on Play.

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cdf
Google's Nexus line so far has been to set a standard for their partners to
follow, in terms of price, features, and more importantly, to show the
partners how they mess up Android with their bad customizations.

I believe Nexus 7 is intentionally designed to be too small to leave room for
Android tablet partners to innovate. In all likelihood, it will be yet another
successful failure by Google - by provoking partners and rivals to
sufficiently respond to the Nexus 7, in terms of price and freedom (as opposed
to the Kindle) so much that it makes Nexus 7 irrelevant.

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jsz0
It's going to be really tough to compete on price without slashing
specs/quality. That's the part that confuses me here. At $250 or $299 it would
have served the same purpose with the third party alternatives hitting closer
to the $199 price point. If we look at the Android SmartPhone market only
Samsung is really having a good time with it right now and that's in a market
with carrier subsidies distorting the market and increasing margins. I can't
understand why any OEMs would want to stay in this business now. They'd be
better off building high margin accessories for Google's 0 margin devices
instead of trying to compete against them.

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Zaim3
The Android tablet ecosystem was stuck in a chicken/egg problem where nobody
would develop for it until there was a market, and they'd be no market until
there are tablet apps. A successful Nexus tablet increases the value of the
entire ecosystem.

Also keep in mind that there -is- a margin for ASUS. Google's reference
devices have always been a split where the OEM gets the hardware profit and
Google controls the entire experience. The Nexus 7 follows the exact same
model all of their previous efforts have.

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codex
Google's tablet business model is actually superior to Amazon's. Google has
better ad. monetization than Amazon, and just as good a theoretical
monetization of digital media (movies, music, and books).

Amazon has sustainable advantages in a shitty business
(retailing/warehousing/shipping physical goods) but when it comes to digital
media, it's just bits, a commodity. It is much easier for Google to sell
digital content than it is for Amazon to monetize web browsing and email,
which is what most people do with tablets.

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DaNmarner
Amazon is in a much superior position than Google in this competition. They
didn't gain significance because of better tablet product or ad monetization;
they are significant because of all the credit card information in their
database before they entered the digital content delivery business. The
friction from buying content on Kindle Fire is minimal, which is a
deterministic advantage Amazon and Apple have over every other digital content
provider in the mobile device market.

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ZeroGravitas
Note that it’s being sold through the play store (collecting the users card
details) and comes with free credit for the store.

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DaNmarner
Exactly, "collecting", not "having".

