How Google is squeezing the stuffing out of manufacturers, by fielding magnificent new machines with nearly no profit margin.
Long ago, I worked for a company that was convinced its future depended on selling a collection of gardening books.
Trouble is, nobody wanted them. Near desperation, we hit on the notion of giving the first book away for free. At this we succeeded handsomely.
What then? We had no idea, but daydreamed that we did. Just put our product under people's noses, we told one another, and the quality of our amazing gardening books will do the rest.
We were idiots of course. The new "customers" we acquired by giving our product away weren't buyers, but freeloaders. They took the freebies and ran.
Laugh away! But tell me now, what separates my own clueless crew from the geniuses at Google?
They're just as obsessed with selling Android tablets as we were with gardening books. They haven't quite made them free yet, but they're edging close with their Nexus line.
Nexus is Google's own signature brand. There have been quite a few Nexus phones,and we'll discuss them elsewhere. But what fascinates me right here and now are the first two Nexus tablets -- the 7-inch Nexus 7 and the Nexus 10, whose size you can guess.
Both tablets are cutting-edge, both have devastatingly low price-tags, and both appear to be winning market share from Apple.
Yay Google! You beat up the iPad! But as the smoke clears, something else floats into view...
And that "something else" is called the law of unintended consequences.
These two dreadnought tablets are also blasting the entire, emerging economy of Android tablets to smithereens.
The Nexus 7 and 10 have both won widespread acclaim. They have set the new standard by which all future Android tablets will be measured. Which means that, from now on, anything more expensive than these murderously cheap machines will be perceived -- and described by reviewers!-- as bloated and overpriced.
I'm calling it The Nexus Effect. And you can't stuff this genie back into its rainbow-hued Nexus box.
The Nexus Effect may have dented Apple's dominance, but it's also flattening tablet prices like a MOAB daisy cutter. Henceforth anyone except Apple who dares field more expensive fare is going to get their heads handed to them.
I'm talking about you, Acer. And Asus better worry too, even though it makes the Nexus 7 itself. HTC too. And just about every other Android partner except Samsung. (Watch Samsung. You too, Google. Pat your pockets after you meet with Samsung.)
WHY? Well, let's take a close look at the armaments of these Nexus tablet juggernauts. First, in June of 2012, we were dazzled by...
NEXUS 7: razor-sharp and breathtakingly cheap
The 7" Google Nexus 7, made by Asus, debuted with a base price of $199.99. And six months later, that's still a droolworthy price for an HD tablet with quad-core, Tegra 3 processor. Comparisons with the new iPad Mini are tough, for reasons I'll get to later, but Nexus 7 scores big on at least one important feature.
THE BIG DEAL: Nexus 7's 216 dots-per-inch (dpi) display easily out-specs the new iPad Mini's 163 dpi screen.
How big is this advantage? Theoretically, it's immense. I mean, if there's one thing I hate even more than small type, it's fuzzy small type. And Nexus 7 is indisputably unfuzzier than anything else of its kind. Weirdly, it's not such a huge deal after you play with both tablets for a couple of weeks, whereupon you discover that iPad Mini has richer blacks, truer colors and brighter everything, but for the purposes of selling the tablet to family gurus and trend setters, Nexus 7's 216-dpi him display is absolutely killer.
Plus, Nexus fun to use, which could not be said of previous Android tablets. So let me repeat, at 199.99, Nexus 7 remains a breathtaking deal. I bought one for myself immediately and then purchased two more as gifts. Sales aren't even close to the iPad, but Google says it's been selling close to a million a month. All this with practically zero advertising and and chaotic distribution. Try Best Buy, Newegg or Google itself and good luck.
NEXUS 10: spec'd and priced to leave iPad 4 in the dust
Made by Samsung, the 10.05-inch Nexus 10 will set you back $399.99, a hundred smackers less than the 4th generation iPad.
Now, $399 ain't dollar-store pricing, but in context, it's a jaw dropper. Barely more than two years ago, Samsung introduced its first Android slate-- the 7" Samsung Galaxy Tab -- starting at $599. That was $100 more than the first-generation iPad. Critics wondered how it could possibly sell, and it didn't. Lesson learned.
By contrast, the new Nexus 10 was evidently engineered to kick the iPad's aluminum butt. And that it does...
For starters, it boasts a breakthrough 2560 x 1600 pixel display.
How amazing is that? Really, truly. This is actually more pixels than Apple's new flagship DESKTOP computer, the 27" all-in-one iMac!
To be sure, some argue that Samsung's 300 dots-per-inch (dpi) screen doesn't really trump the iPad 4's "mere" 246 dpi Retina display. Apple's marketing hype might have been correct; as tech-journal-of-record Ars Technica notes, your retinas really can't tell the difference. Under magnification, however, the Nexus 10 definitely rules and you can't deny the screen is an absolute stunner, second to none.
Then there's Sammy's Exynos 5 processor. In-freaking-credible. By at least one set of measurements, it beats the bits off the iPad 4 cpu. My favorite tablet testbed -- Geekbench 2.3 -- crowns the Nexus 10 engine king of 'em all. Yes, even with the Android handicap. Apple's iOS 6 tablet software is more efficient than Android Jelly Bean 4.2, but Geekbench takes this into account.
And the Nexus monicker seals the deal,
making both incontrovertibly godlike.
Specifically, "Nexus" not only means reference-quality hardware. You also receive latest and greatest version of the Android operating system pretty darned close to release -- in pristine, unskinned condition -- maybe not forever, but for two years, which is close enough to eternity in tech reckoning.
So what? SO EVERYTHING. I kind of suspect most Nexus buyers don't have a clue what Nexus means, and if they did, nine out of ten might view the entire upgrade thing as a nuisance. But for Android true believers like yours truly, this is the holy grail.
You must understand that, unlike mollycoddled Apple-fanboys, we Android geeks are a band of digital orphans. Receiving near-zero support from the jerks who made our amazing devices, we are forced to rely almost exclusively on one another. We huddle together in ragtag forums with unadorned names like "Android Forums."
Here, like Fagin's Boys, we teach one another the tricks of "rooting:" breaking into our own machines, because it's the only way to keep the danged things up-to-date...
So just imagine! A tablet that updates itself without rooting! For we, the Google-forever faithful, Nexus devices therefore occupy a sacred space at the dizzy tippy top of the Android acropolis.
So consumers are getting a great deal for sure, and I want to be clear that I love, love, love both Nexus machines. LOVE 'EM! My dear spouse gave me a Nexus 10 for Christmas, after considerable hunting...
But what about manufacturers? What exactly is in it for them?
The way I imagine it, Google talks a manufacturer into making a Nexus device by promising fame and glory.
You'll be a NEXUS player, they promise, high above the common riffraff. Your machine will be the Princess Kate of tablets, photographed endlessly, gossiped about on thousands of blogs, envied and longed for by millions -- literally torn apart by iFixit -- fondled on YouTube for month after month. And then comes the pitch...
"Of course, you will make no money on this, BUT AFTERWARD..."
Well, what about afterward? Maybe you're thinking "Lots of companies sacrifice short term margins for longterm market share." And they do.
But what happens to them? In particular, what's happened to PC makers? Once the world's biggest PC maker, HP nearly quit the business after years of 5% margins. Dell's been in the same hell. All they've been getting in return for their own thin margins is broke.
Mind you, I'm shedding no tears for Samsung. Apart from Apple they're the one outfit big enough to survive this and grow even bigger in the after-burn, like a Giant Redwood after a forest fire.
But Asus? Acer? Toshiba? HTC? Not so happy. Is Google buying market-share for Android tablets at their expense?
You bet they are. And I'm not so sure who will still be in this business a year from now.
Except Samsung. And watch out for your own skin, Samsung. Google has been noticing that "Android," for many consumers, is just another word for Samsung. Word is that Google-owned Motorola is readying an "X-tablet" to snatch the whole business away from Samsung. But that's rumor.
Meantime? Enjoy the war, consumers. Heck, I'm writing this on a Nexus 10.
Like the folks who took those free gardening books from my poor old employer -- now all-but-defunct -- I too took the goodies and ran.