by Derek Ross, 10 months ago
When Google announced the Nexus 7 for a mere $199, many speculated that Google might be using a similar model to the Amazon Kindle Fire. Sell with an extremely thin margin, if any, and make…
Just yesterday, the internet went abuzz with reports of a 32GB version of Google’s successful Nexus 7 tablet. The chatter was sparked by a screenshot produced by the folks at Droid-Life, which supposedly depicted an entry in the inventory system of the British retailer Carphone Warehouse.
On a side note, along with the Nexus 7 32GB, there also was an intriguing “Samsung Nexus 2” entry that we hoped it referred to the Galaxy Nexus Plus. Sadly, that proved to be a dud, the device in question actually being the Nexus S of yesteryear.
Getting back to the Nexus 7 32GB, today a new screenshot emerged that appears to confirm the existence of the extended storage model. Here’s the image:
Bizarrely, the 32GB model is listed at about $260, which is the same price that the 16GB model goes for. In fact, the prices of the current two models seem off, with the 8GB model ($199 in the Play Store) costing $244.
A quick search reveals that the model number of the Nexus 7 32GB – ASUS 1B-32 – pops up in the systems of many online retailers, the most prominent being Buy.com. At all the sellers that we checked, the device is listed as either “Coming soon” or “Out of stock”.
The juicy part of this report concerns the shipping date of the “new” Nexus 7. According to Droid-Life’s sources, the undisclosed reseller is supposed to receive shipments of the “special model” starting October 24. Therefore, the 32GB might launch in late October or early next month.
We can’t help notice that this timeframe would give Google the opportunity to steal some attention from Apple, which is rumored to announce an iPad mini in mid-October, with a launch scheduled for the first half of November.
Google could also answer the challenge of Amazon, by dropping the price of the 16GB Nexus 7 to compete with the Kindle Fire HD. The 8GB model might be shelved in this case.
Google definitely needs to bolster the Nexus 7 to better compete against the iPad mini and the Fire HD. And the Surface will also launch at the end of October. Google pretty much has to make a move on the tablet front, if it wants to keep mindshare ahead of the crucial holiday season.
At this point, we have no news on the inclusion of a 3G modem in the Nexus 7. But Paul O’Brien from MoDaCo reported in early September that a 3G Nexus 7 might come in six weeks, in other words, in mid-October. It may be that Google is planning to make its tablet even more attractive by launching a souped-up model with cellular connectivity.
When I wrote about the 3G Nexus in September, some of you have commented that they wished 3G was available sooner, so the interest is definitely there. Now, the question is can Google and Asus make a 3G-enabled tablet with more storage and still rake in a profit? Bills of materials suggest so.
The component experts at iSuppli have shown that the bill of materials for the 8GB Nexus 7 is about $152 or about $160 with manufacturing cost included. The 16GB model costs $167, with manufacturing included. So, in spite of early speculation, Google does make money of the Nexus 7, even of the basic model.
Adding 16GB of storage space shouldn’t cost too much. Assuming that Asus is able to get storage for 70 cents per gigabyte (which is how much Amazon pays), the bump in storage would cost a little over $11.
Moving to connectivity, Nvidia has finally managed to integrate LTE radio on its Tegra 3 chips, as the One X+ shows us. I am not sure how much more does the Tegra 3+ chip cost compared to the first generation, but I don’t think it’s more than $10 (a discrete smartphone baseband chip costs about that much).
However, the MoDaCo rumor only mentioned 3G and not LTE, so I don’t think that Google and Asus will bring out an LTE version of the Nexus 7. More likely, they will add a 3G baseband chip, which shouldn’t increase the manufacturing cost of the end product by more than $10.
Drawing the line, a 3G-enabled Nexus 7 with 32GB of storage shouldn’t cost Asus and Google more than $190 to produce.
And keep in mind that economies of scale are working to decrease the manufacturing cost. Barron’s Tiernan Ray reported today that the orders for the Nexus 7 have been increased twice in the last three months, with the current “build plans” reaching 8 million units, versus the previous 6 million. These figures tell us that Asus is likely able to get better deals on components, thus lowering the final bill.
Finally, the $25 Play Store credit that early Nexus 7 customers received has ended last weekend, so Google will save some money from there as well.
All of the above is just speculation, but I am confident that Google will operate some sort of changes to the Nexus 7 come November.
If my line of thought is correct, Google will drop the 8GB Nexus 7 and slash the prices of the 16GB and 32GB models. The 16GB would become the base model and go for $199, while the Nexus 7 32GB will probably cost $249. If Google decides to add 3G to the mix, the cellular equipped models will cost slightly more.
If you are considering buying a Nexus 7 now, it might be a good idea to wait for a few more weeks if you can. Provided that my previsions are correct, Google should make an exciting announcement by the end of the month.