Google and Asus may be turning a healthy profit on the Nexus 7 Android tablet after all. The Google Nexus 7 is one of the best and cheapest Android tablets to date, and was launched last month at Google I/O 2012. It is priced at $199 for the 8 GB version and $249 for the 16 GB version, and comes with some impressive hardware running Android 4.1 Jelly Bean.
When it was launched, everyone assumed that Google and Asus might be selling each tablet either at break-even levels or making just a tiny profit on each tablet, just like the Amazon Kindle Fire.
However, a recent iSuppli component teardown of the Google Nexus 7 suggests that they might actually be making a decent profit on each unit sold.
According to the IHS iSuppli analysis, the 8 GB Nexus 7 costs nearly $151.75 to build, while the 16 GB Nexus 7 costs around $159.25 to build. This means a neat profit margin of around 24% on the 8 GB variant and 36% on the 16 GB variant.
This means that Google or Asus are definitely fighting off the domination of the Apple iPad to gain market share, but not at the expense of their profit margins. It also means that should Apple choose to launch an iPad Mini, it could launch a similar tablet with higher margins given its excellent economies of scale and Tim Cook’s operational genius. Apple could also easily charge a premium and price its iPad Mini at around $299, ensuring a much juicier margin.
As expected, the launch of the Google Nexus 7 tablet has sparked off yet another series of rumors about a low end tablet by Apple, also known in the tech press as the iPad Mini.
There have been a lot of rumors so far about the fabled iPad Mini, which Apple will supposedly launch to reign supreme over the entire tablet market, by grabbing even the budget segment from the hands of Google’s Android.
The new rumors suggest that the iPad Mini is already in the works, and will sport a 7.85 inch Sharp IGZO display panel, which supports Retina display resolutions.
Apple will price it in the $249 to $299 range to compete with the likes of the Google Nexus 7 and the Amazon Kindle Fire. It is supposed to be unveiled later this year, but we would take this rumor with a pinch of salt.
Apple has already managed to almost perfectly optimize its production processes for the iPad. We expect it to drop prices on older iPads to target the budget market rather than launching new variants.
With each new iPad, Apple just drops the price of each older variant by $100 or more. That might be the best way to maintain a consistent experience across devices while ensuring minimum fragmentation. It also enables Apple to maintain its high margins by minimizing costs.
And rest assured, Apple will never take a hit on each unit sold, like Google or Amazon. It doesn’t need to.
There has been a very persistent rumor which rears up its ugly head once every few weeks. It’s about the iPad Mini, speculated to be a cheaper 7 inch version of Apple’s iPad. Many analysts believe that Apple may launch a cheaper 7 inch version of the iPad along with the iPad 3 next year.
Steve Jobs had always maintained that Apple would never work on a 7 inch iPad, as they believed that a 10 inch display was the minimum screen size required for a useful tablet.
However, the success of the new Amazon Kindle Fire tablet has validated that there is a market for cheap tablets. Apple currently dominates the high end of the tablet market, but Amazon seems likely to conquer the low end. If Apple launches a cheaper version of the iPad, it could potentially end up dominating that segment too, effectively ruling the entire tablet universe.
A new rumor, sparked off by a report in Taiwan’s United Daily News, states that Apple has received samples of a 7.85 inch display from AU Optronics and LG Display, implying that Apple could be working on a 7 inch iPad.
However, going by the current trend in the iPhone lineup, Apple wouldn’t go for a 7 inch iPad if it wanted to enter the low end tablet segment. It would rather make the iPad 2 available at a lower price point, while selling the iPad 3 at the current price points. Given Tim Cook’s operational genius, Apple could possibly make a cheaper iPad if it had the same design as the current one.
The iPad may go the way of the iPhone 4S, with the iPad 3 having the same design as the current iPad with more powerful hardware, and the current iPad 2 price being bumped down.
However, at this point, it’s all speculation. Knowing Apple, it’s pointless to speculate about its plans. But like everyone else, we will be tempted to.
There’s something about Apple and its products which leads even the slightest rumor to spread like wildfire across the blogosphere. Before the “Let’s talk iPhone” event earlier this month, most analysts were speculating that Apple would launch a new iPhone 5, as well as a cheaper variant – iPhone 4S. All of them were wrong.
Now, everyone is speculating that Apple may be working on a new 7 inch iPad, christened the iPad Mini. It will be a cheaper version of the iPad, with a smaller display, and low specifications.
Apparently, the success of Amazon’s Kindle Fire has convinced Apple that there is money to be made even in the low end of the tablet market, even if the gross margins may be lower.
The rumors were sparked off after an analyst made a statement after meeting with several technology supply companies in China, which seemed to indicate that Apple plans to launch a lower priced iPad Mini for the price sensitive consumer segment.
I said earlier that I expect Apple to continue to rule the high end of the tablet segment, while its competitors shoot themselves in the foot. The Amazon Kindle Fire is likely the only other tablet which could be successful at the scale of the iPad. However, if Apple does launch an iPad Mini, it could easily grab significant market share even in the low end of the market.
Whether or not Apple will actually do that, sacrificing its hefty margins is something no one knows yet. Given Apple’s legendary secrecy, we’ll possibly have to wait until Apple reveals it itself.