The strategy behind the Nexus 7
<p>The Nexus 7 I ordered for my wife last week arrived two days ago.  That&#8217;s been enough time for Cathy and me to look it over closely and get a good feel for its capabilities.  It&#8217;s a very interesting device not just for what it does but what it doesn&#8217;t do.  There&#8217;s a strategy here, and as usual I think Google is playing a longer game than people looking at this product in isolation understand.</p>
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<p>The Nexus 7 seems to me to be very obviously designed to be an inexpensive web terminal for use with home and small-business WiFi networks.  Look at what&#8217;s missing: cellular modem, rear-facing camera, SD card. These are exactly the things you&#8217;d want in a road-warrior device intended to compete both at the high end of the cellphone market and against notebook/netbook PCs at their low end.</p>
<p>That having been said, the Nexus 7 does the limited job it&#8217;s designed for extremely well.  It&#8217;s easy to configure, easy to use, and the audiovisual presentation is slick without being gratuitously flashy.  We found the voice-search capability particularly effective and well integrated.  We were able to watch a movie at our kitchen table (<cite>The Black Shield of Falworth</cite>, a classic piece of 1950s swashbuckler cheese) without lag, artifacts, or dropouts.</p>
<p>The device is selling like crazy and has spectacular buzz.  After I had already privately decided to get Cathy one, Linus Torvalds gave it a public thumbs-up and I got completely unsolicited &#8220;buy one now!&#8221; raves from two friends of mine not previously noted for anything but jaded cynicism about the consumer-electronics gadget of the week.  It is clear that Google and Asus have a mega-hit on their hands &#8211; analysts are already describing it as the Kindle-killer and I think there&#8217;s no hype at all in that assessment.</p>
<p>The really interesting question about the Nexus 7 is why it&#8217;s not a more ambitious device. It&#8217;s clear from looking at the components that Asus could have built a full-featured tablet that could compete head-to-head with the iPad 3, had Google wanted that; the obvious inference is that Google <em>didn&#8217;t</em> want it.  Which is interesting and revealing.</p>
<p>What the Nexus 7 looks like to me is that it was designed to meet a specified price point rather than a specified feature set. It&#8217;s what you&#8217;d come up with if you told the engineering team &#8220;It&#8217;s gotta retail under $250 with tax and shipping &#8211; start with your dream tablet, cut out features that won&#8217;t fit that budget, and give me the best device that fits a plausible use case. Then we&#8217;ll design the marketing around that.&#8221; </p>
<p>What kind of product and market strategy does this fit?  I don&#8217;t think that&#8217;s complicated.  This is also exactly what you&#8217;d do if your goal were to disrupt the iPad&#8217;s market from the low end.  You&#8217;d identify a large class of potential iPad  customers and target their use case (home and small-business web terminal) with a device that&#8217;s a substantially better value for the dollar.  The goal would be to play for the highest-volume segment of the market in order to put downward pressure on the iPad&#8217;s growth rate without challenging it directly, the latter being something Asus/Google may not be able to do yet.</p>
<p>Thus: IPS display nearly as good as the iPad&#8217;s (216ppi to 264pp). A replaceable battery, and a case with clip closures rather than glue.  Google wants any random PC shop to be able to service this thing; it&#8217;s part of the value proposition. That aspect of the design also says to me that it&#8217;s aimed at low-cost fleet deployments.  Certainly if I were a Fortune 500 IT manager I&#8217;d look hard at it as a way to lower my whole-lifecycle costs.</p>
<p>My prediction is testable.  If it&#8217;s correct, the Nexus 7 won&#8217;t be a one-off.  Within four months or so we&#8217;ll see a followon that ramps up the pressure &#8211; probably a 9-inch screen, possibly SD card support, and (crucially) price point no higher.  I don&#8217;t think, along this line of attack, we&#8217;ll see a cellular modem being added any time soon; it&#8217;s in Google&#8217;s interest to avoid conflict with its smartphone partners, who have been doing a good job of pushing Android &#8211; that is, as opposed to its tablet partners who&#8217;ve been doing a relatively crappy one.</p>
<p>Remember Google&#8217;s long game.  For Google&#8217;s advertising and content businesses to flourish, Google needs web access (and especially mobile web access) to be thoroughly commoditized, with nobody else in a position to collect rent on the path to your eyeballs. This is why they don&#8217;t need to make a dime of licensing income on Android &#8211; it&#8217;s a strategic play to prevent rent-seeking.</p>
<p>The design and positioning of the Nexus 7 is perfectly consistent with this goal.  It&#8217;s a patient, well-thought-out play that will amortize fixed costs for other firms in Google&#8217;s partner network (Asus, Tegra, whoever&#8217;s ODMing the display) so that follow-on devices can issue at the same or a lower price point.</p>
<p>That result will be good for everybody.  I don&#8217;t think I really need to tell the open-source community to get behind this product and push it, because the buzz says that&#8217;s already happening.  It&#8217;s not the iPad-killer, but the road forward to something that will be is not difficult to discern.</p>
<p>UPDATE: <a href="https://plus.google.com/u/0/103483555539158593557/posts/TvDAo3dJBGZ">Cathy&#8217;s thoughts on the device</a></p>
<p>UPDATE2: Contrary to myth, Tony Curtis does not at any point in <cite>The Black Shield of Falworth</cite> say &#8220;Yonder lies the castle of my fadda da king.&#8221;  His New York accent is, however, hilariously obtrusive throughout the movie.</p>
