Google Nexus 7 (Getty Images via @daylife)
The Nexus 7 is an interesting play from Google. At a personal level I'm still unsure if it's the sort of geek toy I would buy, but at a business level, it's going to cause all kinds of headaches for Google's partners and rivals. Why would Google decide to upset key relationships and go ahead with a loss-leading product that has little short to medium term income potential?
I'll be watching the relationship with Samsung - the leading Android tablet maker. The South Korean company is already under pressure from Apple and the US Courts, now it finds out that Google has undercut the prices of their Tab range by deliberately sacrificing profit margin and jumping ahead in terms of software versions with Jelly Bean. How will Samsung compete when Google holds more cards for tablets will be interesting. Samsung is one of the few companies to have made a dent in the Tablet market with a clearly labelled Android device.
What about the Motorola team now under Google? When there's a whole team capable of building quality consumer electronic devices, and they are passed over, what will that do to morale going forward?
Google will likely have looked at these issues around the release of the Nexus 7, and decided that while they may matter, there are bigger concerns.
The Nexus 7 strategy is based around the Google Play store, where apps, music, and media can be purchased and consumed on the new 7 inch tablet. As a launch offer every tablet will come with free credit to spend in the Play Store - once you buy something the hope must be you'll keep on buying with your own money. Does that sound familiar?
The Nexus 7 reveals how Google wants to play the tablet game. They're gunning straight for Amazon, who not only have a huge content store that people are happy to use, but also have their own forked version of Android running on the Kindle Fire... a version of the OS that Google has no control over, and that earns Google no advertising revenue. Every sale of a Nexus 7 is likely one less sale of a Kindle Fire, slowing down Amazon's ecosystem and adding to the momentum behind a Google controlled experience.
Amazon are able to use the sales made through the Kindle Fire to offset the cost of the unit. Perhaps in the future Google will be able to do the same with the Nexus 7 but right now that's unlikely, even without the bonus credit.
Google want to slow down Amazon and get people buying from Google Play and not Jeff Bezos, they want to get their own established presence in the 7" tablet space, and they want to be seen as the market leader on tablets just as much as they are perceived to be in the smartphone space.
And they're ready to burn bridges and budget to do that. Let's hope they've thought this through.
