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[Editorial] Could Google's Nexus 7 Tablet Force Microsoft to Change Its Strategy?


Editor in Chief

Google's new Galaxy Nexus puts more of a squeeze on Microsoft than it does on Apple or even Amazon. That may seem like a bold statement, but if you look deeper at the big picture, that is exactly what will likely happen. From the get go, most journalists, pundits and analysts have all been pointing out the obvious fact that Google has brought out the new Nexus 7 tablet for three primary reasons.

One is to hit Amazon hard by taking their business concept and attempting to do it better. Amazon may have a big head start on a custom content ecosystem, but Google can likely hold out longer than Amazon selling the Nexus 7 at no cost, while Amazon sells their Kindle Fire at a negative cost. This will give Google time to build up their content portfolio and really put a crimp on Amazon's plans with the Kindle Fire. This is the first and most obvious reason.

The second is also obvious. Google wants to try and help Android compete with Apple's iPad, but do it on a different level. Basically, the Nexus 7 is Google's way of "fighting dirty" by attacking the iPad from a different angle, price. The iPad may be a superior product in several ways to the new Nexus 7, but now consumers will have an option that is pretty darn close (and in certain ways a better experience, because of the easier to hold size) to what you can get on the iPad, but for $300 dollars less.

The third reason isn't quite so obvious, yet is still pretty easy to see if you read between the lines a little bit. Google is bringing out the Nexus 7 to effectively "point the way" for all of its OEMs. So far, most of the manufacturers in the industry have been struggling to gain marketshare and turn Android tablets into a success, because they have been trying to compete directly with Apple on a level playing field with similar and expensive products to the iPad. This will be nearly impossible because Apple already has built up their reputation to astronomical levels in the public eye with their pioneered iPad. With the Nexus 7, Google can build up their own brand recognition for Android tablets and lead their manufacturing partners in a battle of attrition against Apple.

However, there is one other effect of Google's new Nexus 7 tablet that isn't immediately obvious, yet could actually have the most profound effect. Google's Nexus 7 basically forces Microsoft into a corner that it will be hard pressed to grind its way out of, unless it adapts its strategy to match. The new Nexus 7 device is an incredible value. It is a very powerful device for a very inexpensive price, and it basically makes most of its competition in that price range look like junk. Microsoft just unveiled their Surface Tablets, but even their lower-end offering, the Surface RT will be $500-$700 dollars. Yes, it will be a powerful device as well, and have some interesting and versatile features, but at that price point it might have a hard time competing with Apple's iPad and especially with the Nexus 7.

Make no mistake, all computing devices are moving inexorably toward touch-screen and perhaps some form of gesture-sense in the future, ala the movie "Minority Report." Even Microsoft has seen the writing on the wall regarding this, that is why they are pushing so hard with Windows 8. Ultimately, Microsoft may have an ace up its sleeve that it will be forced to play. That is its partnership with Barnes & Noble. Microsoft is likely trying to position itself in two different markets. The Surface RT will try to compete with Apple's iPad, and the Surface 8 Pro will try to become the new norm in the Enterprise and IT markets, and eventually replace the need for traditional laptops. However, for Microsoft to get really serious, it will likely need to follow Google's lead by pushing into a more budget-friendly segment as well. Perhaps a Windows 8 powered Surface NOOK is a good place to start?