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.
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lets just hope they don’t use the Nexus brand, Because if they do that would taint the Brand forever. i do think it’s a bad idea.
Exactly, they have built up a good branding with the phones and now the tablet, releasing a cheap and unusable tablet with that brand would be a very bad idea.
The problem with this “race to the bottom” is that one company has to be the first to reach that price point. I feel that if Google is the first one to release a $99 tablet, people may begin viewing Google as a cheap company and possibly tarnish their reputation. Also, going back ton the article, I would definitely want the best screen for my money if I’m buying a media device such as a tablet and by creating a sub-$100 tablet, I just don’t think that the screen quality will be where it needs to be and causing consumers to switch to Kindle Fires or the current Nexus 7 available.
My personal opinion here is considering these sacrifices needed to achieve the “bottom” lowest price possible, it will more or less kill the tablet market for Android. I think the old saying “If you build it, they will come” holds true. Build a device that is worthy of its price tag and people will ultimately buy it. I own a Transformer prime. I personally love it but no way in the world was it worth 500 bucks. Add in the keyboard dock and its 650. Totally over priced, especially considering the issues it has (although in all honesty, I have only experienced the GPS issue). If the prime was priced at, say, 350….now thats reasonable. Yes, the Prime had top of theline specs but there is no way it actually cost anywhere near 500 bucks to build when you factor in volum quantity pricing that manufacturers enjoy. This is whats wrong with tablets in general. They cost just to darn much. Give me a 10 inch Google Nexus for 250 bucks. Ok, so you might have to skimp on storage space but if you do, then leave me the option to add more. Trade the cameras for a MicroSD slot. Dual core should be enough for now. I guess the real issue is, most everyday products have such a long lifespan that the components that are in them tend to start out expensive but as more devices are made with them, they become cheaper. The cheaper the components, the cheaper the overall product. The tablet industry, mobile industry, heck, even the PC industry moves way too fast for that to occur. And yesterdays technology dissappears the instand todays technology is released. That is what keeps the prices of the devices so high. If the Nexus 7 was out when I ultimately bought my Prime, I think I still would have bought the prime because I am an enthusiast. But MOST casual tablet shoppers would have picked the Nexus because of its price. It will, however, be my last tablet for a very long time because there is no way I can justify this cost.
Steve, so your vote is for high quality tablets (with large screens) but with a more moderate price and not to bother with $99 tablets.
I think many people would agree with you.
A Nexus tablet for the mass markets in China and India will close the door on non-enterprise (not supplied by company) tablets like Surface and iPad. Vanity tablets by Apple will continue to sell until the laughter reaches Singapore.
By that are you saying that you think Google with make a $99 tablet but sell it only in places like China and India?
There are going to be $99 Android tablets all over the pharmacies and discount stores next month. A few weeks back I was at a CVS that had a $99 laptop with touchscreen running Froyo… which they told me was left over from last xmas.
Google will have to decide whether they want the low-end Android experience to be controlled by lousy Chinese knockoffs with no Google Play, or if they want to release something decent, at or slightly below cost, knowing that many users will buy apps, books, music and movies once they have the tablet. In all likelihood, they’ve already made that decision one way or the other.
As for “I would always go for the more expensive device”, well, I would too, but you and I are not the target market for a $99 tablet. (Though I’m considering picking up a Nook Simple Touch so that I can root it and have a tablet that’s great to use outdoors.) The ones who will pick up a $99 tablet are those who can’t afford more; decent products at that price point are what make markets explode.
I see Chinese branded jb tablets on the market with rockchip1.5ghz processor that score 6800 on antutu. They also have mali-400 graphics and a gig of ram.
Tegra 2′s are probably dirt cheap to buy. Why not try an omap 4430. They gotta be cheaper with their new a-15 coming soon.
I was interested in the $99 nexus 7, but not for those specs. Not to mention how many undecided people it’ll drive away from android because of horrible performance.
Gary, while you bring in an interesting point by saying that with a $99 tag it would be race to bottom, I disagree that this would destroy trust on android system. I am from India and $100 tablets already exist. In fact there is one at $130 price point with Jelly bean and features pretty much all the features in Acer iconia 110 but people know they are not branded and there is a high possibility of them conking off after couple of months. So even if Google launches the $99 tablet people know it is not nexus 7 or ipad. Smasung and HTC sell $100 GSM phones in India and they sell HTC one X and S3 for $800- $900.. yes you heard it right $900 and the brand image is still intact, all Android phones. So I think it is more choices for consumers and people know they cant expect the same visual or fast processing experience in a $99 tablet vis-a-vis a $250 tablet.
As jnffarrell1 mentioned, it could work in those markets, but not in the USA or Europe.
Google Single Core (Seriously??) There’s another $99 tablet that launched this week and it’s actually good – The Novo 7 Legend – and it’s a dual core – in the US it’s available at a site called TabletSprint – definately worth checking out — good company – Ainol Electronics makes it and they received “runner up” status at CNET/ CES 2012 for “Best Tablet of the Year” — Ainol also has two new Hi-Res 10 Inch tablets coming out soon, a Dual Core for $209 and a Quad Core with a 1920×1200 Liquid Crystal display (like Apple’s Retina screen) for around $275 –WOW- the only site that seems to offer them right now in the US is TabletSprint —
The Novo 7 Legend isn’t out yet
If it would be difficult to get the Nexus 7 down to $99, could the reality of this be a single core 4.5 inch 8gb wifi only Nexus device as a discount i-pod touch competitor?
It is of course a possibility, another variation is that it could be an eBook reader.
Keep your eye on the prize here…the goal isn’t to sell a ton of $99 tablets, it’s to sell a ton of $149 – $169 tablets with slightly higher specs than the $99 version. Marketing 101…
Hmmm, not too sure about that strategy, I don’t think Dell makes a range of cheap/bad PCs so that people will buy their more expensive ones.
Google should keep hitting at both the top as well as the bottom segments of the market. Premium products should come at a higher price where there would be no compromise with quality. At the same time there should be better branded products at lower price range with obvious sacrifices at quality level. At least the consumer will know that a Google branded product will meet certain requirements as opposed to cheap unknown brands available all over the world market.