The Nexus 7 is reported to have already sold out at most key retailers. While it didn’t have the impressive lines of a typical Apple product, Google was reported to have delivered significant volumes to retail most of which are gone and likely won’t be refreshed by the next shipment of this tablet until early August. This suggests that this tablet is far more successful than Google anticipated and that it is a viable competitor for the iPad, hitting it in a similar fashion to the way the Amazon Fire did.
But the Amazon Fire hit in the fourth quarter which means it mostly was purchased as a gift, the Nexus 7 is hitting early in the third quarter or outside a typical gift window, suggesting people are buying this tablet largely for themselves.
As a result the 7” form factor appears to have legs and Apple is right to be thinking of bringing out their own 7” offering.
Amazon’s Anticipated Entry
Amazon is rumored to have three tablets coming out at various price points. Currently the market rumors suggest that the new Kindle Fire 2 will come in up to four versions (I doubt there will be more than three). A base level Kindle Fire likely at an even more aggressive price point similar to what is in market, an up-level Kindle Fire with a display and price similar to the Nexus 7, a large format Kindle Fire with a display similar to the iPad, and a Kindle Fire with a Transflective Display (which would allow outdoor viewing). Clearly some of these would come with 4G options but most would be Wi-Fi only.
Price points would begin south of $200 and likely approach $500 for a fully configured large format device. The wild card is that trans-reflective display, likely from Qualcomm’s Mirasol Division, which would allow them to return back to the outdoor viewing advantage they marketed heavily around the original e-paper based Kindles.
Right now, if rumors hold, I expect two 7” products and the large format to be accurate reports. Trans-reflective has been difficult to bring to market but given that the product would be clearly superior for reading (a core Kindle feature), I expect it is prioritized and a trans-reflective Fire will show up if and when that technology is ready.
Right now expect the 7” products late August or early September with the 9” product due around Thanksgiving for Black Friday. Until we see a trans-reflective prototype that is meeting requirements that offering is unlikely but it would likely be the most powerful of the group if it shipped at competitive price points. In 7” in the second half, Amazon appears to have the strongest line of 7” offerings but Google got their new product out first.
Apple: Execution Issues
We continue to hear rumblings out of Apple suggesting the late arrival of the notebook and iMac refreshes weren’t planned but the result of an inability to execute post Steve Jobs. Departing employees are complaining about the inability to reach decisions as a company designed to be micro-managed struggles to figure out delegation (Tim Cook delegates). The new iPhone was due in June and it appears it may not make it to market much before fall and that suggests the timely shipping of a 7” product may not be in the cards either.
The firm’s recent misstep with EPEAT, where they pulled the plug on that green effort and were forced to put it back in place, is also indicative of executive management problems in that they clearly had not anticipated any real blow back from their decision (and they should have).
Finally, Apple’s biggest technology partner was Samsung and those two aren’t getting along at all right now. Samsung has some of the best 7” display technology in market (and they use it in their own 7.7 tablet). This suggests Apple may not be able to get some of the technology they need to bring their 7” offering to market timely and missing the fourth quarter could be devastating for them.
Wrapping Up: Surface Tablets and Nexus 7”
One company we aren’t talking about this round is Microsoft and their Surface Tablets, believed to be far more advanced but also significantly larger and more expensive than these 7” offerings they risk arriving with an iPod like product when a mini alternative is catching all of the interest. The market appears to be moving aggressively to a 7” form and if Microsoft doesn’t have one; they may not get the sales they have been anticipating.
The Nexus 7 is currently the tablet to beat, it is getting all of the excitement and some decent reviews but we aren’t in the fourth quarter and it is mostly facing off against the old aging Kindle Fire and the vastly more expensive iPad. In a few weeks that advantage will end and the Nexus 7 may look old against a then more recently launched Kindle Fire 2 line, Microsoft Surface Tablet, or iPad-Mini or Nano. This battle won’t be won in the third quarter but in the fourth, and I wonder if Google launched too soon.
President and Principal Analyst, Enderle Group
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