TabletPC

Google has begun shipping its Nexus 7 and the initial response to the tablet seems to be positive, with industry sources indicating that the platform vendor will be able to ship 2.5-3 million units or even more in 2102. But it remains to be seen whether the roll-out of the Nexus 7 is a blessing or a curse for other vendors of Android-based tablets.

The rise in demand for the Nexus 7 may break Apple’s dominance in the tablet PC market, while boosting the share of Android-based models in the segment. For this, Google certainly will come out as the sole beneficiary resulting from the launch of the low-priced Nexus 7.

Reactions to the availability of the Nexus 7 vary from vendors to vendors. Although the launch of the Nexus 7 looks to take on Amazon’s Kindle Fire and Apple’s iPad, the two primary rivals have still kept the pricing of their tablets intact.

Samsung, which enjoys a high level of brand recognition, cut slightly the prices of its tablets in order to cope with increasing competition and to pave the way for the launch of its own new models.

But for Acer and Asustek Computer, they seem to have adopted the same strategy of lowering the prices of their 10.1-inch models to the levels close to those quoted for 7-inch models by Google or other rivals in order to attract consumers.

The white-box vendors simply slashed their prices to the bone, with some 7-inch models now available at US$59 in some large-scale retail channels in the US.

With the exception of the iPads, all of tablets currently available in the market are running on Android platforms, which means that price competition within the Android segment will continue to intensify and that it will be more difficult for hardware brands to generate profits out of the production of Android tablets.

Google’s strategy of setting the pricing of the Nexus 7 to a level close to the BOM clearly indicates that Google doesn’t want to make money from hardware sales. But such a practice actually enacts a barrier that is hard for other hardware vendors to pursue.

The new price competition triggered by the Nexus 7 may enable Google to cut a small piece of market share enjoyed by Apple, but to a great extent, Google eventually will eat up the share held by other members in the Android club.

Hardware brands which have climbed on to the Android bandwagon might come out empty-handed, while seeing Google continue to enjoy profit growth due to expanded advertisement income generated through the increasing popularity of the Nexus 7.