No profit in Nexus 7 pricing, says Rubin


How do you take a tablet featuring a 7-inch display and quad-core Tegra 3 processor and sell it for $200? You leave no room for profit. And that is exactly what Google and ASUS are doing with the Nexus 7, the newly unveiled tablet that seeks to carve out a place for itself right alongside Amazon’s Kindle Fire. Google has a lot more at stake with the project, agreeing to shoulder all marketing costs and more in exchange for a tablet that was designed from the ground up by ASUS in a time period spanning only four months.

“Our engineers told me it is like torture,” said ASUS chairman Jonney Shih in an interview with All Things D. As to the mix of high-end specs at a $200 price point, Shih said of Google, “they as a lot.” According to Android head honcho Andy Rubin, when the Nexus 7 is sold via Google Play it is sold at no margin. Google is further taking a hit by offering a $25 Google Play credit during the initial round of sales.

It’s clear that Google is hoping to copy more than just the Kindle Fire’s low cost. Just as Amazon relies on the Kindle Fire bolstering the sale of Amazon’s digital and physical goods as a means of turning a profit off the device, so will Google rely on Google Play purchases and advertising revenue to make up for the lack of profit built into the Nexus 7’s price. But Google won’t feel the squeeze. The company has been known to try out all sorts of strange products and strategies with little concern about making money, as they did with the original Nexus One sales strategy and continue to do with the strange and futuristic Project Glass. But in the case of the Nexus 7, Google’s willingness to meet customer needs and challenge the tablet marketplace might just pay off.

[via AllThingsD]

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  1. And Asus will make out by getting new clientele. I personally was made a believer after buying the original Transformer, can’t wait to get this as well.

    1. Yes! My Transformer really helped make this one an easy decision for me.

  2. I’m loving this tablet

  3. “Shih said of Google, “they as a lot.” ”

    racist joke???

    1. It’s a sexist joke

    2. … or just a typo by Kevin, who probably meant to put “ask”

      1. That’s immediately what I thought when I saw the typo. Not sure how anyone could take that as a racist thing.

        1. cause he is asian and that is how a very oriental asians speak english, the leave pronunciations off of works, such as the letter K of ask

          1. Even so, I personally wouldn’t consider that “racist”. It is what it is.

  4. So how did Asus originally plan on making a profit by selling the ME370T at $250 with 16GB of storage along with a rear camera and nicroSD card slot?

    1. It cost $208 dollars to make a 7 inch tablet with out a camera. So I guess if they installed a cheap camera it would come to around 227 dollars. So they could make a profit at 250 dollars, just not $200.

      1. No that’s how much it costs to make a kindle fire, to manufacture a nexus it must cost around 250 considering it has a front camera, a quad core processor, higher resolution screen, not to mention the material/build quality is higher then the kindles as well

    2. They are focusing on long term profits, the more people that buy these tablets the more customers and traction the Google play store will have = a small profit in the long run, that’s why they built the kindle to be dependent on the amazon market and without a micro sd slot so they can get more sales via their services, apple does the same thing that’s why their devices don’t have a micro sd slot and are limited only to their Itunes services.

  5. No profits huh? So switching memory from 8gb to 16gb costs $50?

    1. That’s the Apple trick.

      1. Not quite, Apple would charge $100 for the storage increase instead of $50.

    2. I think Google and Asus are hoping to make up a bit for lack of profit in the $200 version.

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