You don’t need me to wax on about the Nexus 7. The Internet is on fire with reviews on how this one tablet will kill the Kindle Fire and cause schools across the globe to abscond from their iPad deployments.
I have a single concern. While the device seems lovely, Andy Rubin is quoted as saying the device as zero margins. It’s my guess this is a $300 device being sold for $200. That’s a problem for two reasons:
- Devices which do not make money give the maker no incentive to continue.
- It really sticks a knife in the back of other hardware manufacturers
Google is eating the development cost on the device and they’re swallowing the marketing costs. And what happens in a year? It ships with Jelly Bean (remember that the previous OS, Ice Cream Sandwich managed a 7% market share of Android handsets) which will receive what level of support. I just see an ever reducing market share for devices. It just seems the whole market is anti-consumer. Is it enough to aim for the alpha geeks and hope they’ll act as unpaid support personnel for the device?
Will Google make a Nexus 7 v2? Will it continue to support the device in the next OS revision? And the next?
Oh Matt, what have you said!
The Nexus will receive future OS updates (assuming the hardware supports it) just as the current Nexus S and Galaxy do. (And like Apple only support currently available iOS devices)
I dispute your assumption that this is being subsidised. I have no proof, but this would be a massive mistake to sell this type of device at a subsidy of $100. I maintain that they can produce this for less than $200, perhaps only $199 but ASUS is making money on this even if google is not. Google don’t and probably never will make a lot of money from the Play store, so search is still their main revenue stream. Subsidising hardware to support search is a risky strategy, even for them.
You also worry too much about fragmentation. Consumers don’t care, fragmentation is why developers get paid. (I’m sure you’ll say Android developers don’t get paid. Pffft!)
Android 4 should see the phone and tablet OS merge which should please developers.
How many devices will run 4.x.x?
Who knows, but it will be 100 million plus in a year and that is a big enough market surely?
Actually…
Andy Rubin says there’s no margin in this device.
And fragmentation woes are fine when it’s one device. But if this is deployed to a school and they stop making it, what is it replaced with? When the year 9s and the year 10s have different devices – I mean different devices, different manufacturers and differing standards of support.
Google have now committed themselves to keep on producing this device. Otherwise there will be tragic fragmentation of the ecosystem. You can’t really have year 9 using the Nexus 7 with , say, three versions of support forecast. And other years having other devices which will cost more (remember the margin thing) and have less support for future OS versions (see every other tablet or phone ever made) as well as different experiences and UI conventions (how many phones ship with the stock Google experience).
Oh Matt, what have you said?
I don’t believe that Google are subsidising this device and certainly not by such a margin.
For a company that makes most of it’s revenue through search, subsidising hardware to support that business model seems a bit risky even for them.
Android is Open Source. If Google enters the tablet market, who cares?
The Nexus 7 just continues their reference design for phones and they have a poor track record of selling volume.
Other ODM’s won’t be worried. Their challenge is to better the Nexus devices which they already do with phones.
Even the poorly seeling HTC One devices are highly regarded.
The one elephant in the room is of course Motorola. What will google do with them?
You also worry far too much about fragmentation.
Android 4.x.x will merge the phone and tablet OS so, in future, developers will be happy. Or as happy as they’ll eveer be 😉
The current fragmentation is certainly a pain, but is becoming less so. And what is the alternative?
Palm failed. Nokia and Rim are failing. Windows is betting everything on 8 and it’s not even out yet.
Apple is the odd one out because it has a the desirable ‘cool’ product.
You can control the OS and the device chain, but history shows that that is not always a successful business model.
Perhaps Google are taking a calculated risk here.
Remember Google originally started out with a product that made no money at all. They adopted their business model to make money – mainly via advertising.
Now add in that the Nexus 7 can only use wifi to surf the internet and has built in gps – you suddenly have a powerful device that can provide almost laser targeted adverts and general information based on a user’s location.
I think that Google are calculating on making money from advertising revenue sold through adwords and free apps.
They can probably make more money from advertising in the lifetime of a Nexus 7 than adding say adding $50 to the selling price.
True. But I didn’t see any ads on the screenshots I’ve seen. Not to mention the privacy concerns that raises. And applicability in schools?
There is no Privacy concerns – remember this is Google, you consented to this as soon as you signed up.
To get the most from the Nexus 7 it is likely you will have be using a Google Account.
By creating an account with Google you agree to accept these clauses in their privacy policy:
When you use a location-enabled Google service, we may collect and process information about your actual location, such as GPS signals sent by a mobile device. We may also use various technologies to determine location, such as sensor data from your device that may, for example, provide information on nearby Wi-Fi access points and mobile towers.
Then there is:
We may collect device-specific information (such as your hardware model, operating system version, unique device identifiers and mobile network information, including phone number). Google may associate your device identifiers or phone number with your Google Account.
So basically they have your permission to throw whatever adverts they want at you when you browse the internet with your Nexus 7.
What you’re describing is a privacy concern. If it’s their way or the highway then you’re maybe not going to purchase them for your business or school. So the concern comes before you buy.
So, with that knowledge in mind (and the knowledge that Google looks after their customers* very well), the privacy concerns become extremely important. Compare and contrast their position with Apple – a company which stubbornly resists any attempt to pass individual data to third parties. (And Google recently circumventing privacy controls shows their allegiance)
*advertisers
Matt,
There is a simple way to stop any privacy issues for schools/businesses and that is to route all traffic from an office/school wifi connection through a proxy server. This way you can filter out any requests to sign into Google accounts.
Anyway the same privacy issues apply to the ipad – if a user signs in with their Google account or uses Google maps. Google will know where the ipad is located.
In today’s world privacy no longer exists, th eright to privacy has been removed – mobile phone operators can locate your mobile within a few metres, even shopping centres track your movements using your mobile phone, and you don’t even know they are doing it.
The police monitor your car movements around the road network. Supermarkets record what you buy.
Even if you went and lived on a remote island it wouldn’t be private as a satellite or drone could be watching you from a long distance away.
You think Google needs you to log to your Google account to be able to track you?
Oh my.
Using the privacy doesn’t exist line is a bit hackeyed (and it’s my line). I don’t think that counts when you’re dealing with kids and schools.