Google has made another foray into the hardware space. We have already reported earlier on the Chromebox and its rather underwhelming impact. Now Google has entered the very lucrative and fast-growing tablet space with the Nexus 7. It appears like this gambit is looking good for now because many major retailers are reporting that they have ran out of the Nexus 7 tablet. The tablet just hit U.S. stores last Friday. The large video game and gadget retailer GameStop reported on Friday that it already sold out its first two allocations of the Google device. No wonder that the $199 tablet, manufactured in partnership with Asustek, has been getting many great reviews from gadget reviewers in the blogosphere and in respected media outlets. Similarly, Staples and Sam’s Club, the warehouse arm of Walmart stores both reported that they have both ran out of the 7-inch device. The only other major offline retailer that managed to weather the Friday rush for Nexus 7 tablets is Office Depot. As of last Sunday, it was reporting that it still had inventory of the device.
The Nexus 7 is Google’s attempt to break in to the tablet market. It is quite a clever strategy because by downsizing the tablet to a 7-inch form, Google effectively lowered the price and this would make the gadget more affordable to a wider range of electronics consumers. Moreover, it is a great platform for the search engine giant to turn more people on to the Android operating system. The strategy is that the device is primarily a gateway for consumers to access online content. Of course, since Google dominates online search, much of that access would be passing through Google’s properties. This increased traffic volume results in higher ad revenues for Google. It is a neat plan on paper and it looks like they have picked the right partner for the hardware end of things. Asustek is related to the company that is a longtime producer of computer main boards. Asus knows a thing or two about hardware manufacturing.
By tapping Asus to handle manufacturing, Google ensures that its tighter control over the device design is executed more smoothly because it is working with such an experienced partner. This is the same control strategy in terms of the tablet operating system that Microsoft is pursuing with its Surface device. Whether Microsoft can replicate Google’s success with Nexus 7 remains to be seen. There is a whole constellation of issues revolving the wisdom of Microsoft moving into hardware considering its dominant software position and the risk of alienating its hardware partners. Google on the other hand does not have such concerns because it is a primarily search company and OS software maker. Its OS is open source and it allows for a more flexible blend of hardware vendors. If anything, Nexus 7 device would make for a great advertisement for Android’s flexibility, power and performance for the tablet space. It might be Google’s calling card for hardware manufacturers to use Android in the tablet space. So far, Android has not put a big dent on the iPad’s market share in the tablet space. Since the tablet market is growing much faster than the PC market, it is definitely a market arena that Google and Microsoft need to be in and establish a toehold on. For Microsoft, it does not want to miss the train on yet another crucial market segment. For Google, it is a trial of the ability of its Android operating system to dominate mobile devices other than smart phones.