Yesterday we reported on rumors of the possibility of a $99 Nexus 7 from Google. This magic price point is seen, from a marketing point of view, as a sweet spot which will drive the further consumerization of tablets. At the moment the lowest priced big brand tablet is the Amazon Kindle Fire which costs $159 (with special offers and sponsored screensavers displayed on the lock screen). It is also possible to get single core, 7 inch Chinese tablets for as little as $79. However it is worth noting that in most countries a sales tax needs to be paid to customs when you get your tablet delivered. This can push the actual price to around $95.
What this means is that sub $100 single core, 1Ghz, 7 inch tablets with Android 4.0 or 4.1 (depending on the manufacturer) do exist today and it is possible to make them for that price. However once you add profit margins, R&D costs and corporate overheads it does become a bit more tricky.
If Google really is trying to create a budget tablet it will likely start a new “race to the bottom”. Although traditionally used as a socio-economic term to describe the taxation policies of countries or states, the concept can be equally applied to building cheaper and cheaper consumer devices to boost sales. The problem with the race to the bottom is something needs to be sacrificed to reach the low costs. In economics, work force regulations, wages and taxes are offered on the altar to attract businesses to a given area. In consumer electronics what is sacrificed is quality, features and usability.
Assuming Google launch a $99 tablet, it is likely that other big names will try something similar. The problem is that once these devices get into the hands of consumers they will find that their expectations haven’t been met and this will irreparably damage the Android and Nexus brands.
I have used a single core, 7 inch Chinese tablet for about the last six months and the best word that sums up my experience is “frustration”. At the time the tablet cost me $159 plus sales taxes and it came with Android 4.0.3. During day to day use apps constantly stopped responding and even simple UI actions, like swiping, became burdensome. Eventually I downgraded the device to Android 2.3 and I have had a happier experience. I also have a dual-core device from SmartQ and the experience is way better. It seems to me that Android 4.0 and 4.1 just aren’t suited to low-end single core processors.
Yesterday’s rumor mentioned an 800Mhz single core CPU and I must say I am skeptical. But to reach the magic $99 mark the device will also have to use a low end display, probably with just a 800 x 480 resolution. This is markedly different to the 1024 x 600 display found on the Kindle Fire or the SmartQ S7 and drastically different from the 1280 x 800 display found on the current Nexus 7.
Other features which will likely be affected are the amount of RAM, the built-in flash storage (maybe just 4GB) and the battery life. The point is this. If I had to choose between a $99 single core, 800 x 480 tablet with a bad battery and 4GB of storage, or a better dual core tablet for $159 (like the Kindle Fire), I would always go for the more expensive device, which at the end of the day is only $60 more. The problem is that if non-technical consumers see a Google branded tablet for $99 they could be tempted by the price but ultimately remain disappointed by the overall experience.
What do you think, should Google race to the bottom? Please leave a comment below. I will try to reply to all reasonable comments.