Google Strikes at the Heart of the Tablet Nexus

Keki is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Remember NVDIA’s (NASDAQ: NVDA) prediction a few months ago?  The graphics chip maker predicted the release of a Tegra 3 powered tablet this year for as little as $199.  Well, Tech Giant Google (NASDAQ: GOOG) recently released the all-new Google Nexus 7 Tablet powered by a Quad core Tegra 3 processor. Other significant specs in the Nexus 7 include its 12 core GeForce graphics processor and its high resolution 1280x800 pixel 7 inch display. The tablet also runs Jellybean - Google’s latest version of Android.  

For all you tech geeks out there, you’d know that at $199 for an 8GB model and $249 for 16GB, is an incredible bargain. It easily puts all the cheap generic tablets out there to shame.  Besides that, the Google Nexus 7 is bound to give sleepless nights to a few big time players.

Pain for Amazon
You don’t need to be a rocket scientist to figure out that Google is now directly poaching Amazon’s (NASDAQ: AMZN) tablet market share. The Kindle fire tablet priced at the same $199, doesn’t quite make the cut in terms of hardware specifications and has even witnessed a huge decline in sales in recent months. According to research firm International Data Corporation (IDC), Amazon’s market share declined significantly from a lofty 16.8% back in the fourth quarter of 2011 to just above 4% in the first quarter this year.  

However, Amazon has announced that it would release new 7 inch and 10 inch versions of the Kindle fire tablet. It will be interesting to see how Amazon gets back at Google.

Besides the tablet space, Amazon also got a drubbing from Google with the introduction of the Google Compute Engine. The cloud computing service which supposedly rivals Amazon’s Web Services (AWS) is also available for half the price. Ouch!

iPain for Apple as Well
Anyways, coming back to the tablet wars, its not just Amazon.  Apple (NASDAQ: AAPL) might also feel the pinch. While some of you might say that the iPad is a premium product so it doesn’t make sense to compare it with budget devices, even the iPad is subject to some degree of competition from lower priced offerings. At $499, the third generation iPad featuring a dual core processor starts at a price more than twice that of the Nexus 7 which might have a smaller screen, but packs in a powerful quad core processor and graphics chip.

However, on the digital content front, in my opinon, Apple beats Google in terms of the quality of apps and other digital content specifically made available for the iPad.  

Trouble Surfacing for Windows
And lets not forget Microsoft (NASDAQ: MSFT) with its newly introduced “Surface” tablet and others such as Nokia, Dell and HP who are yet to conjure up their own Windows based tablet devices. So would they be affected?  Yes, they would, but only to a certain extent. In my opinion, windows based tablets should largely have a different set of buyers, mainly professionals who would like to do serious work on their device using Microsoft's solid set of office applications and also have a little fun with the occasional game of Angry Birds.

The Bottom Line
Google’s Nexus 7 would certainly shake up the tablet market in terms of pricing. But the hardest hit would be felt by Amazon. The company is already witnessing shareholder ire due to its wafer thin margins. So it will be interesting to see how other tablet makers, especially Amazon fight back.


kekidf has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Amazon.com, Google, and Microsoft. Motley Fool newsletter services recommend Amazon.com, Apple, Google, Microsoft, and NVIDIA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

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