5 Reasons Why the $199 Google Tablet is a Terrible Idea … But I’m Getting One, Anyway

OK, so this was a post I started writing three months ago – when we first started hearing about a $199 Google Nexus Tablet. At the time I thought it was a bad idea – and we didn’t even know who was making it or what the specs might be like at the time! Now that we know that it is an ASUS device, with a footprint essentially similar to the Kindle Fire/Nook Tablet/Samsung Galaxy Tab/etc, with some decent sounding hardware compromises for the price, and the newly announced Android OS 4.1.

And guess what – I am more convinced than ever that it is a bad idea. Here are five reasons.

1. Nexus Who? If you hear Nexus and immediately think of the Google-supported Android device line that until the abysmally supported Galaxy Nexus was the mark of a ‘pure and quickly updated Android experience’ … congratulations, you are a hardcore gadget geek. For the general public it is just another brand, one with less cachet than Droid or Galaxy.

Hardware geeks such as myself are intimately aware of the Nexus name, and were it not for my desire to have a hardware keyboard (Droid 4) I would have a Galaxy Nexus in my pocket now. But there is an important thing to remember – everyone talks about Nexus as the ‘pure Google ANdroid experience’, but remember: the initial Nexus One sold directly through Google … didn’t sell at ALL. It is a drum I beat repeatedly, but Google as a commercial retailer has yet to demonstrate the ability to pull in customers.

2. Devaluation of the Android Tablet: Let’s be clear – if you are selling something for less than cost in order to gain market share, there is a word for that: dumping. Depending on the situation, it is very much prohibited by international trade laws. But you might ask – isn’t that what console makers do at first? And you’d be right – Microsoft and Sony lost money on each console sold for a time. BUT … there is a significant difference. Each of those companies employed the ‘razer & blade’ approach in that they wanted to get as many systems into user hands as possible because they earn ~$10 for every game sold! That business model makes sense.

Similarly Amazon was estimated to earn ~$10-25 profit on each Kindle Fire depending on the cost model used, but they were estimated to make ~$100 per year (first year) per tablet sold based on purchases of content through Amazon. Also, smartphone makers have devices that cost end users less than a couple of hundred dollars from their carrier, but the carrier has paid the manufacturer as much as THREE TIMES that price – the smartphone maker gets a decent profit on the device sale, and the carrier makes money on the two-year lock-in plan.

I make those analogies because they are VERY different from what a PC maker does: they HAVE to make their profit on the sale of the device since they get no cut of anything post-sale. That is why so many PCs come loaded with crapware trials and ‘click me’ desktop items: they are paid to do so, which helps their profitability. For a device maker like Acer, whether it is a PC, a laptop, a netbook or a tablet … their ONLY source of profit is initial sale. That is why Samsung bought mSpot, and so on – sustained revenue streams are where it’s at!

So here is my bottom line on this: in an attempt to wage war against Amazon, Google has killed the entirety of the Android tablet market using a ‘scorched earth’ approach. Even the very solid Samsung Galaxy Tab 2 7.0 is outdated and overpriced at $249 for the 8GB model.

3. Yet Another Compromise-Heavy 7″ Tablet: Doug pointed out that the Nexus 7 has a Tegra 3 quad-core processor, which quickly sent Francis, Joel and myself off drooling. And there is already some praise for the 1280×800 screen, compared to the low viewing angles and low resolution of earlier budget tablets. But aside from those things, we have a pretty basic experience – 8GB (or 16GB for $50 more like the Nook Tablet), no expansion, only a front camera built for webcam usage, lousy mono speaker, rubber and plastic abound, and so on.

Also, there is plenty of data showing that even a dual-core device offers few advantages over a well optimized single core … so while nVidia is naturally high on the quad-core potential, the reality outside of a precious few games remains to be demonstrated.

4. Google Has No Ecosystem: OK, so that isn’t strictly true, but think of it this way – what would you think if Apple released an eReader wrapped around its wondrous iBooks ecosystem? That is right – you’d laugh yourself silly. Want to hear a funnier joke? Google Books. Oh, and Google Movies. And the funniest of all? Google Music – which launched with massive fanfare and stated expectations from Google of as much as $12-13 BILLION this year … yet is on target to make … (snicker) … $100 Million. The reality is that the only stuff people bought were the $2.99 sales, and now that Amazon simply price matches … there is no need to ever buy from that inferior service again.

And since we have been up and down time and again how Apple owns 90% of the app MONEY market, and the NEXT most successful app market financially is Amazon … no need to beat that drum anymore. It is plain and simple – Google has no ecosystem.

On the same lines, I see this device as ‘easily beatable’ – all Amazon has to do is match features in the Fire 2 and it wins.

5. Closed or Fail: tying into the last point, Google has positioned the Nexus 7 as ‘Built for Google Play’. THAT is the business model – lose money on the device but gain it by selling music, movies, apps, games, books and magazines. Certainly that has worked well for Amazon – their AppStore is second in profit to Apple, and customers immediately snapped up millions of the Kindle Fire and loaded up with tons of media that streamed in order to offset the limited storage.

But what if customers don’t want to use Google’s services? The Android mantra is ‘open’, so I should be able to use my Amazon MP3 player to stream from the cloud; read from my Kindle and Nook libraries; watch on Hulu and Netflix (something tells me my Prime Video Streaming won’t be happening here); read my Zinio magazines, and so on. Every time I buy elsewhere I am hurting the potential profitability Google needed to include in any reasonable cost model.

Also, to tie back to another point – what incentive does Google have to give full access to these services to COMPETING tablets such as Samsung and Acer? The entire business model succeeds best when everything flows through the official Nexus device. That will make it very interesting to watch.

Yet in spite of that I have already decided to pre-order one. Why? Here are three reasons:

1. I LOVE the 7″ form factor: I have been through 6 (!) 7″ Android tablets over the last year and a half, though right now I only have the HTC Flyer and Kindle Fire remaining. Why so many? I ADORE the size – the screen is big enough, devices are fairly compact, the overall size is great for carrying anywhere. The problem is that most devices really failed to deliver – whether the original Tab’s pokey performance, the Acer Iconia’s horrid view angles, how abysmal Android has been on devices so far, or just the lack of compelling value … the Kindle Fire remains the best Android tablet I have owned.

2. Just might be the perfect compromises: I mentioned that a few of us were drooling over the hardware specs of the CPU/GPU. And while tablets are all about maximizing efficiency by keeping CPU cycles as low as possible, I would love to ditch other handheld game systems and play some ShadowGun or Modern Combat on a quad-core tablet at 1280×800 and 60FPS. Also, two of our main complaints with the Kindle Fire were the lack of BlueTooth and physical volume controls. The Nexus 7 has both … but sadly no expansion.

3. At $199 … why NOT? This is what could be called the ‘Kindle Fire Clause’ … that for $200 you are getting a very capable small-form tablet. It is a minimal cost, less than most smartphones, certainly less than a new iPad or laptop, and with it you have something you can use for email, web, games, apps, reading, video and so on.

As you can see, there are a number of potential issues with the Nexus 7 tablet – the most troubling for me is the impact on the rest of the Android tablet market. High priced tablets are pretty much dead – those looking at the Transformer laptop-style device are probably interested in the Microsoft Surface, and everything else has already failed in the market. Anyone charging much more than $250 for a 16GB 7″ tablet will no longer sell devices. Just as I wonder what the longer term impact is with Microsoft’s Surface on other OEMs, so do I wonder about the impact this will have on the Android tablet landscape.

But I don’t make devices, so what I really care about is that I can get a great product for a low price – and that is ultimately what the Nexus 7 is trying to deliver. So while I might have some really nagging issues with the business model … I will still be checking out the hardware!

What about you?