Google Nexus 7 seen as threat to Microsoft Surface, not Apple's iPad
Analyst Shaw Wu with Sterne Agee believes the key to the Nexus 7, co-developed by Google and Asus, is its aggressive $199 starting price point. That matches the Amazon Kindle Fire, which got off to a strong start when it launched late last year before demand quickly fizzled.
The sub-$200 price of the Nexus 7 is expected by Wu to threaten the Kindle Fire and also give Google's hardware a "fighting chance in the market." He also believes Google's aggressive pricing could also spell trouble for Microsoft's recently unveiled Surface tablets, set to launch later this year.
If Microsoft prices its ARM-based Surface tablet above the $399 entry price of Apple's iPad 2, Wu thinks it would be a "disastrous move." Microsoft declined to reveal pricing for the Surface, only stating that the model running Windows RT would be competitive with similar tablets based on ARM processors, like Apple's iPad.
Even before Google unveiled the $199 Nexus 7, industry watchers felt Microsoft's pricing strategy with Surface will be the key to how well it performs in the market. Earlier this week, analyst Chris Whitmore with Deutsche Bank said he believes Microsoft faces a "major dilemma" in pricing the Surface, as undercutting Apple's iPad could make it impossible for its third-party hardware partners to compete and remain profitable.
As for the Nexus 7, unveiled by Google on Wednesday, Wu's take is shared by Brian White of Topeka Capital Markets, who declared that the Nexus 7 is "just another Android-based tablet" that won't pose a threat to Apple's iPad. Like White, Wu believes that Apple will be the "least impacted" by Google's new hardware.
"We believe GOOG's competitive impact on AAPL is likely limited in the near-term given AAPL's stronger ecosystem of devices, richer availability of tablet apps, and 3G/4G wireless connectivity," Wu wrote.
He added that Google's entry into the hardware market isn't a guaranteed success, as the search giant initially struggled in releasing its own smartphone hardware, the Nexus One, before finding more success with the Nexus S and Galaxy Nexus. Wu also questioned whether the 7-inch form factor adopted by the Nexus 7 has staying power, citing waning demand for the similarly sized Kindle Fire.
The Nexus 7 features a quad-core CPU by Nvidia and a 1,280-by-800-pixel display and will go on sale in July. It is priced at $199 for an 8-gigabyte model, and $249 for a 16-gigabyte variety.
127 Comments
A gimmick notebook with Windows 8 that can't run Windows 8 phone apps plus no price or ship date. The biggest threat to the Surface isn't Android or iOS - it's Ballmer. [URL=http://forums.appleinsider.com/image/id/169767/width/306/height/428][IMG]http://forums.appleinsider.com/image/id/169767/width/306/height/428[/IMG][/URL]
It can't be a threat to devices that don't even exist in real life yet. The Windows soon-to-join-the-Slate tablet doesn't even have a release date or price yet :)
Here's the thing. Obviously at least the Intel version of the Microsoft Surface is aimed at the iPad market, with creation-type software and peripherals. However, if it's priced at >$899 then it'll likely lose out.
The RT version, however, will only run Metro apps (+Office) and so will likely turn out to be used a lot more for consumption (at least initially). Even if it's priced at $399 (and I think $499-599 is much more likely), I don't see it as competing well vs. the Fire and Nexus 7 due to their rock-bottom pricing.
I honestly don't see much of a win anywhere here for Microsoft since $999 for the "good" surface is the price of a MacBook Air or other Ultrabooks which seem much better suited for most business professional's needs.
I don't see the Google Nexus 7 competing at all with the Surface, really.
I think Apple could make things very interesting with the introduction of iPad 4th generation in 1Q2013. Should we expect iPad 2 at USD $299 with iPad 3rd generation at USD $399 and iPad 4th generation at USD $499? For that matter what will the specifications of the iPad 4th generation be? Better CPU? Apple A6 dual-core CPU (ARM Cortex A15) 32 nm process? This is arguably the best thing Apple could do to improve the new iPad. Better GPU? PowerVR G6200? Quad-core? The Rogue series is said to approach the 1 T FLOP range. Better Display? Not likely. Better Camera? Possible. Maybe probable but this isn't the best form factor for a high end camera? NFC for use as a POS terminal? Seems possible. Perhaps a very strategic move to give NFC the kick-in-the-pants needed. HDMI? Never. MicroSD? Never. 802.11ac? Possible. Maybe probable. Apple is rapidly approaching a saturation point for features and functions in both the iPad and iPhone product lines. A flooded market favors the product with the most brand recognition and brand capital as well as the greatest number of retail outlets. We know who has the most brand recognition and brand capital.
You're right. Nexus tablet will hurt Surface because they both suck and are going to go down together.