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Google Nexus 7 seen as threat to Microsoft Surface, not Apple's iPad

post #1 of 127
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Google's new Nexus 7 tablet will increase competition in the tablet market and threaten Amazon's Kindle Fire and Microsoft Surface, but isn't expected to have an effect on sales of 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.

Nexus 7


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.
post #2 of 127
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.

428
post #3 of 127

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 :)

post #4 of 127

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.

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post #5 of 127
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.
Edited by MacBook Pro - 6/28/12 at 8:36am
post #6 of 127

You're right. Nexus tablet will hurt Surface because they both suck and are going to go down together.

 

 


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post #7 of 127
I doubt seriously that it is a competitor to the Surface. The surface's only chance is as a notebook replacement option, at a price point around $700. Google's approach is "Internet Everywhere" while MS still chants "Windows Everywhere." I doubt either approach will be able to really compete with Apple's strategy, which doesn't seem to get such an easy label.
post #8 of 127

A product that has zero profit is one that hurts the shareholders the most.

post #9 of 127
Quote:
Originally Posted by Smiles77 View Post

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 don't agree. Given price, software availability, and other considerations, the Intel version of Surface appears to be targeted at Ultrabooks. The ARM version is targeted at the iPad and other tablets.

Keep in mind that while the iPad can be used for content creation, by far the majority of users use it for consumption. Other than very light content creation (Facebook pages, etc) which even Surface RT will be able to do, only a very tiny number of iPad users use it for serious content creation.
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post #10 of 127
Quote:
Originally Posted by aaarrrgggh View Post

I doubt seriously that it is a competitor to the Surface. The surface's only chance is as a notebook replacement option, at a price point around $700. Google's approach is "Internet Everywhere" while MS still chants "Windows Everywhere." I doubt either approach will be able to really compete with Apple's strategy, which doesn't seem to get such an easy label.

I agree conceptually but Google's approach is actually "Ads Everywhere."
post #11 of 127

The Nexus 7 is competing for the lower-income, periphery tablet user, book reading, buy your parents a tablet, just want a cheap portable Netflix player, I don't want a big dang iPad to carry around crowd, whoever that may be.  So it is some iPad people, some Surface people, and a whole boatload of Amazon Fire folks.

post #12 of 127

If I had to choose between the two....I would choose the Google 7" tablet over the MS "conglomeration" tablet. The MS product just looks too large, too clunky and too clumsy to use.

 

But I prefer my iPad, iP4s and MBA...I would buy an Apple 7" if they introduce one.

post #13 of 127

The rumored 7" iPad would doom them both.

post #14 of 127
Quote:
Originally Posted by markbyrn View Post

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.
428

I'd agree. The product looks like it was designed by a committee. The Courier also springs to mind. Meanwhile I'm waiting for some developer to emulate Metro just for laughs rather like this does for the Courier. http://news.cnet.com/8301-10805_3-57405317-75/the-ipad-app-that-will-remind-you-of-microsofts-old-courier-project/
Edited by digitalclips - 6/28/12 at 9:04am
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post #15 of 127

No one wants a Microsoft Tablet, except Paul Thurrot and MJ Foley.

 

People trust Apple to deliver a good product. The millions of people who bought and experienced iPods, this has developed well earned customer trust and loyalty. People now know what to expect and what they will get with an Apple product.

 

With a Windows product, the consumer knows that you can guarantee some kind of serious trouble.

post #16 of 127
Quote:
Originally Posted by MacBook Pro View Post


I agree conceptually but Google's approach is actually "Ads Everywhere."

 

Great point....Apple sells a product.... For Google and Facebook the product they sell is "you." And they do this by "harvesting" your personal information.

 

I deliberately use the word "harvesting" because it sounds so "evil!"

post #17 of 127
Quote:
Originally Posted by zbarsky View Post

No one wants a Microsoft Tablet, except Paul Thurrot and MJ Foley.

People trust Apple to deliver a good product. People have been through the iPod cycle, which developed customer trust and loyalty. People know what they get with an Apple product.

With a Windows product, you can guarantee some kind of trouble.

I don't think that's fair. I think a lot of people would prefer a Windows tablet over a Google one.

While Microsoft has been guilty of antitrust violations in the past, they do not have the reputation for abuse of private information that Google does.

Furthermore, the Intel version has the potential to satisfy a niche that isn't currently being satisfied. Two groups actually:
1. Those who want to run Windows apps on a tablet
2. Those who want a tablet with keyboard.

Only time will tell how large those groups are.
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post #18 of 127
Quote:
Originally Posted by aaarrrgggh View Post

I doubt seriously that it is a competitor to the Surface. The surface's only chance is as a notebook replacement option, at a price point around $700. ...

 

Except there is no way the Surface Pro (the notebook/ultrabook alternative), is going to be priced anything lower than $800 - $900 and even then it will have somewhere between razor-thin and no margins at all.  

 

Google's play here, like Amazon's is to throw away the hardware to drive market share and to put eyeballs on the products it makes money with (advertising and bulk media sales/rentals).  Microsoft on the other hand, can't afford to have zero margins and neither can the OEMs.  

 

The MS "money-maker" is Windows itself and Office.  On the "Surface RT", these come with it for free, and on the Pro (the only model OEM's are likely to be competing with),  their costs just destroy whatever razor-thin margin exists.  To have any kind of margins at all the Surface Pro will have to be closer to $1,000 than $700 and OEM's likely couldn't make one for less than $1,200.  

 

Very strange days we live in.  It's a complete lose-lose-lose situation for MS and the OEMs trying to build to their spec.  The only other option however would be for MS to drop the focus on Windows everywhere and try to switch all the profit making to the Office engine.  This means downsizing and slowly slipping into that good night however so no one at MS will agree with this until Balmer is gone and it becomes an absolute necessity for the company's survival.  

post #19 of 127

Do people realize that the Nexus 7 could be a real threat to the iPod touch?

I think Google knows it cannot dethrone the iPad 3 any time soon, but it can eat up Apple's market share from the bottom up.

FOr $199 the Nexus 7 has the same 8GB memory as the iPod touch but offers an SD expansion.
It also has a much larger screen, and offers an IPS panel which is superior to the iPod's current display.  And the Nexus has a quad-core CPU with Tegra 3 GPU, which at least on paper sound better than what the iPod touch offers for that price.

 

I am sure the casual gamer who might consider an iPod touch could be persuaded to go with a Nexus 7 instead.   Why would people go for an iPod touch if they can have so much more for the same price?

 


This I think is also a reason why the Nexus does not come with an 3G/4G option.
It is intended to compete with the iPod, which does not offer that either.

post #20 of 127
Quote:
Originally Posted by jragosta View Post

...  2. Those who want a tablet with keyboard. ...

 

I'm not picking on you personally, but I keep seeing this sentiment expressed and it makes no sense at all to me.  

 

The Surface pro is a convertible laptop more than it is a tablet and it does therefore have a (detachable, bluetooth) keyboard.  The way people keep describing this as (paraphrased) "finally a tablet with a keyboard!" is just crazy IMO in that the Surface Pro "has a keyboard" in exactly the same sense that the iPad "has a keyboard" or any other tablet "has a keyboard." 

 

One can argue about inclusion in the box or price, but practically every tablet, and certainly every convertible laptop, "has a keyboard" in this same sense.  

 

We don't know how good the Surface Pro's keyboard is (or even if it really exists in fact), and everything we know about it seems to indicate it will actually be one of the worst keyboards out there.  

 

In that light, it's really extra-specially ironic that the keyboard is being touted as the central feature of this POS.

post #21 of 127
Quote:
Originally Posted by hobBIT View Post

Do people realize that the Nexus 7 could be a real threat to the iPod touch?


I think Google knows it cannot dethrone the iPad 3 any time soon, but it can eat up Apple's market share from the bottom up.


FOr $199 the Nexus 7 has the same 8GB memory as the iPod touch but offers an SD expansion.

It also has a much larger screen, and offers an IPS panel which is superior to the iPod's current display.  And the Nexus has a quad-core CPU with Tegra 3 GPU, which at least on paper sound better than what the iPod touch offers for that price.

I am sure the casual gamer who might consider an iPod touch could be persuaded to go with a Nexus 7 instead.   Why would people go for an iPod touch if they can have so much more for the same price?



This I think is also a reason why the Nexus does not come with an 3G/4G option.

It is intended to compete with the iPod, which does not offer that either.

I'd say it's definitely a threat to the Etch A Sketch too!
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post #22 of 127
Quote:
Quote:
Originally Posted by MacBook Pro View Post

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?

I think if they keep the iPad 2 it will be for institution bulk buys only (ie schools and such). They want consumers to have the newer stuff because it is easier to support.

As for the list of possible features, more storage might happen and if the tech is there I think 802.11ac is very probable as Apple seems to be pushing iCloud and wifi sync. As well as AirPlay.

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post #23 of 127
So we have a Google Nexus 7" tablet with with maximum 16 GB (no SD Card), Wi-Fi only, no retina display, and no rear facing camera. Seriously, Google has reduced the Fandroids to saying it's going to hurt sales of the iPod Touch, and that not believable either.
post #24 of 127
Quote:
Originally Posted by aaarrrgggh View Post

I doubt seriously that it is a competitor to the Surface.

I agree. The Pro model is aimed at the netbook market. And the ARM based consumer tablet is a '10 inch' compared to the Nexus being 7, so folks will expect a slightly higher price. Something these 'experts' failed to consider.

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post #25 of 127
Quote:
Originally Posted by digitalclips View Post

I'd say it's definitely a threat to the Etch A Sketch too!


Yeah, most definitely.  

Especially since the Nexus has a dramatically inferior battery life than the Etch-A-Sketch...

post #26 of 127
Quote:
Originally Posted by Brian Ward View Post

The Nexus 7 is competing for the lower-income, periphery tablet user, book reading, buy your parents a tablet, just want a cheap portable Netflix player, I don't want a big dang iPad to carry around crowd, whoever that may be.  So it is some iPad people, some Surface people, and a whole boatload of Amazon Fire folks.

Nope on the 'some iPad people'. Because folks that feel that way were never going to buy an iPad in the first place. So they are iPad people.

These analysts talk about how the iPad is losing marketshare because it went from 90% to 75% and miss that sales are actually up. The drop in percentage is because the total market went up thanks to this flood of attempted iPad killers, not that the iPad went down.

And even when it is more like 50% share there are likely 100 other tablets sharing the other 50, with most of those sharing something like 5% combined.

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post #27 of 127
Quote:
Originally Posted by markbyrn View Post

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.
428

Is that his 'if only I had a sexy British accent then folks would think I am smart and awesome' face.

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post #28 of 127

The Google tab will be sold in July, returned in August, then discontinued in September, then finally fire-saled in October. The Fandroids will then brag how the tablet sold out before Christmas.

 

Until we see price/availability of the Surface, it should be ignored.

post #29 of 127
Quote:
Originally Posted by MacBook Pro View Post


I agree conceptually but Google's approach is actually "Ads Everywhere."

 

Which doesn't work either because Google makes more money from ads on iOS devices than they do from Android.

 

I can't figure out Google and Microsoft... willing to lose money on every tablet they make when they could just sell ads and software to iOS users and make more money.

 

Strange... all this just so they can say "Me Too!".

Hmmmmmm...
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Hmmmmmm...
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post #30 of 127
Quote:
Originally Posted by charlituna View Post


Is that his 'if only I had a sexy British accent then folks would think I am smart and awesome' face.

 

No, that's his 'I wish I had some real talent like that British guy at Apple' face.

Hmmmmmm...
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Hmmmmmm...
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post #31 of 127
Quote:
Originally Posted by markbyrn View Post

So we have a Google Nexus 7" tablet with with maximum 16 GB (no SD Card), Wi-Fi only, no retina display, and no rear facing camera. Seriously, Google has reduced the Fandroids to saying it's going to hurt sales of the iPod Touch, and that not believable either.

 

Yeah, right my bad, it does not have an SD card slot.  One of the Google presenters in a video mentioned it.  Ah well, should not trust those guys.

Yet Retina display or not, the Nexus admittedly has a higher resolution display than the iPod touch.

The Nexus' is a true 'HD' display (720p that is), which the iPod touch has not.

 

Perhaps not much of a difference, but HD vs not HD might be another one of those tick boxes that new consumer buyers check (along with dual- vs. quad-core CPU, 3.5" vs. 7" LCD and IPS vs not IPS).  
Or parents when buying toys for the kids at Christmas...

post #32 of 127
Quote:
Is that his 'if only I had a sexy British accent then folks would think I am smart and awesome' face.

No, that's his 'my Surface crashed during the demo and I looked like a clown trying to hide it' look.
post #33 of 127
Quote:
Originally Posted by jragosta View Post

... Keep in mind that while the iPad can be used for content creation, by far the majority of users use it for consumption. Other than very light content creation (Facebook pages, etc) which even Surface RT will be able to do, only a very tiny number of iPad users use it for serious content creation.

 

Of course, this is also true if we rewrite it as:

 

Keep in mind that while the Mac|PC can be used for content creation, by far the majority of users use it for consumption. Other than very light content creation (Facebook pages, etc) which almost any computing device will be able to do, only a very tiny number of Mac|PC users use it for serious content creation.
post #34 of 127

The Fire demand is dying out because you don't get full access to Google's Play market.  So why buy a Fire, when the Nexus 7 get pretty much do everything the Fire can do and more for the same $199 price point?

post #35 of 127
Quote:
Originally Posted by GoonerYoda View Post

The Fire demand is dying out because you don't get full access to Google's Play market.  So why buy a Fire, when the Nexus 7 get pretty much do everything the Fire can do and more for the same $199 price point?

Exactly and to quote an article on ComputerWorld, "Google just cut [Kindle Fire's] knees off with this Nexus 7" but perhaps Amazon will start giving the Fire's away if you purchase an Amazon Prime membership. That is the whole point of the Fire - to get you to buy everything from Amazon.
post #36 of 127
Quote:
Originally Posted by hobBIT View Post

Do people realize that the Nexus 7 could be a real threat to the iPod touch?

I think Google knows it cannot dethrone the iPad 3 any time soon, but it can eat up Apple's market share from the bottom up.

FOr $199 the Nexus 7 has the same 8GB memory as the iPod touch but offers an SD expansion.
It also has a much larger screen, and offers an IPS panel which is superior to the iPod's current display.  And the Nexus has a quad-core CPU with Tegra 3 GPU, which at least on paper sound better than what the iPod touch offers for that price.

 

I am sure the casual gamer who might consider an iPod touch could be persuaded to go with a Nexus 7 instead.   Why would people go for an iPod touch if they can have so much more for the same price?

 


This I think is also a reason why the Nexus does not come with an 3G/4G option.
It is intended to compete with the iPod, which does not offer that either.

 

 

Except the iPOD touch is an iPOD, so it's very portable. You can jog with it, go to the gym with it, ride your bike with it, just put it in a pocket or armband and you're set. How silly will you look with a 7" tablet strapped to your arm at the gym. Also, the iPOD touch has a rear camera, which the Nexus 7 does not have. Not to mention it syncs perfectly with your other iOS and MAC OSX devices. I think you're short changing the advantages that the touch has. You can also pick the touch up at Amazon for $179.

post #37 of 127
Quote:
Originally Posted by Gazoobee View Post

Except there is no way the Surface Pro (the notebook/ultrabook alternative), is going to be priced anything lower than $800 - $900 and even then it will have somewhere between razor-thin and no margins at all.  

I doubt the Surface Pro will ever come to be. The RT version, if it ever goes anywhere, will have to rely on developers selling new versions of the same software to run on it. It will have to be the go-to device for taking notes in conference rooms and multitasking a little. It doesn't need to do everything to be a success. I was in a meeting of 20 people this week with four iPads and two laptops; two of the iPads sh/would have been Surfaces, as would one laptop. Two other players could have functioned with Surface rather than their blackberries and notepads. When you add HDMI then there is a chance of converting two more people.

And, for these people, $700-800 would be a perfect fit. Apple could only compete if they offered in-device transcription of the meeting and a good way to highlight/pare down superfluous information and add in pictures.
post #38 of 127

in response to Macbook Pro's post about speculation on the iPad 4:

i think the official name is going to be "the newer iPad"
 

post #39 of 127
Quote:
Originally Posted by GoonerYoda View Post

The Fire demand is dying out because you don't get full access to Google's Play market.  

People want access to Google Play? Why?

post #40 of 127
Quote:
Originally Posted by island hermit View Post

I can't figure out Google and Microsoft... willing to lose money on every tablet they make when they could just sell ads and software to iOS users and make more money.

...which is precisely why they don't really want to make a lot of them, or invest particularly heavily in them. If MS uses them to kick-start the market and OEMs, they sell more licenses. If Google kick-starts the Android Tablet market, they aren't completely stuck with competitors that squeeze out their margins-- Amazon with ~everything, and Apple potentially with iAd.

I never thought I would say this... but Microsoft's strategy makes more sense than Google's!
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