4 ms·

Note that selling 1 million a month is obviously great for Android, but it's not even close to the same as say selling 1 million Galaxy S3's per month. Asus and

Note that selling 1 million a month is obviously great for Android, but it's not even close to the same as say selling 1 million Galaxy S3's per month. Asus and Google have both basically said that they are selling the Nexus 7 at break even or a small loss. Google pretty much has to do this, but it's not exactly helping their bottom line in the same way that Apple selling 1 million iPad Mini's helps Apple's bottom line. At $130 profit per device (which is probably a bit low) Apple would profit $1.56 billion per year with the same sales volume, vs basically $0 per year for Google/Asus. It might not be all about profit for everybody, but $1.56 billion buys a lot of R&D, advanced manufacturing, etc. which puts Apple in an even better strategic position on both the product and operations side of the business, which continues to drive profit.

TwoBit 14y ago
At this point I think that Apple actually has so much cash that they really can't put any more of it towards further use in R&D, etc.
mistercheese 14y ago
I think you're already somewhat saying this, but to clarify, there's a big difference between where the money comes from with selling an iPad vs. a Nexus 7. 1) Google doesn't make money on the selling of the hardware, but with customers using their services and getting locked in their platform. They not only have more "billboards" for ads, but more ways to extract more data, and more meaningful data about its users. More data, more targetted ads, more money. (Google Play may also make some money selling digital goods, a la Kindle Fire) 2) This lessens their reliance on other platforms/browsers to use Google as their default search engine. On a non-Google browser, they would have to pay to be the default search engine (Firefox/Safari), or even worse, not be the default search engine at all (IE). 3) A last, small advantage is that with browser/device marketshare they can push for particular web technologies that are beneficial for Google. So it's not entirely accurate to say that it's $0 per year for Google; someone has definitely made the calculations for #1 and #2 before pricing the Nexus 7.
guelo 14y ago
As long as Google remains a healthy giant company profits should not matter to anyone except Google and Apple investors. For everybody else this is great news. For android developers and users it means that there is more incentive for making tablet apps. For Apple and Amazon users it means that there is serious competition which should mean lower prices and continued innovation going forward.
- r00fus 14y ago
  > As long as Google remains a healthy giant company profits should not matter to anyone except Google and Apple investors. For everybody else this is great news. You are forgetting Asus. I'm sure they care whether they make money.
- admiralpumpkin 14y ago
  I strongly agree with you that competition is good so far as motivates further innovation and, to a much lesser extent, lowers prices. The idea that "profits should not matter to anyone but...investors" I think may be a shortsighted view. In the short term obviously everyone loves low prices, it let's us get more fun geek gear and more often. In the long term I think an "adequate" profit is necessary for these companies to continue innovating. When a company interested primarily in one area (say, advertising) moves into another area (say, hardware) in a manner that attempts to eliminate the profits from the new area are cause, in my opinion, for concern. In this regard, MS's approach with Surface, while very very challenging to its "partners" (perhaps unfairly challenging), is at least an approach that makes it clear that MS expects a reasonable profit margin on Surface. I don't see such behavior with Google and the Nexus 7.
- taligent 14y ago
  But it also means that the users will be disproportionately price sensitive. Which as a developer means your options are limited about what price you can charge for your app and hence what type of app you can build.
  - BitMastro 14y ago
    Elitism much? What next? Let's target only white people. No, just males! They earn more on average than woman!

TwoBit 14y ago

At this point I think that Apple actually has so much cash that they really can't put any more of it towards further use in R&D, etc.

mistercheese 14y ago

I think you're already somewhat saying this, but to clarify, there's a big difference between where the money comes from with selling an iPad vs. a Nexus 7. 1) Google doesn't make money on the selling of the hardware, but with customers using their services and getting locked in their platform. They not only have more "billboards" for ads, but more ways to extract more data, and more meaningful data about its users. More data, more targetted ads, more money. (Google Play may also make some money selling digital goods, a la Kindle Fire) 2) This lessens their reliance on other platforms/browsers to use Google as their default search engine. On a non-Google browser, they would have to pay to be the default search engine (Firefox/Safari), or even worse, not be the default search engine at all (IE). 3) A last, small advantage is that with browser/device marketshare they can push for particular web technologies that are beneficial for Google. So it's not entirely accurate to say that it's $0 per year for Google; someone has definitely made the calculations for #1 and #2 before pricing the Nexus 7.

guelo 14y ago

As long as Google remains a healthy giant company profits should not matter to anyone except Google and Apple investors. For everybody else this is great news. For android developers and users it means that there is more incentive for making tablet apps. For Apple and Amazon users it means that there is serious competition which should mean lower prices and continued innovation going forward.

r00fus 14y ago
> As long as Google remains a healthy giant company profits should not matter to anyone except Google and Apple investors. For everybody else this is great news. You are forgetting Asus. I'm sure they care whether they make money.
admiralpumpkin 14y ago
I strongly agree with you that competition is good so far as motivates further innovation and, to a much lesser extent, lowers prices. The idea that "profits should not matter to anyone but...investors" I think may be a shortsighted view. In the short term obviously everyone loves low prices, it let's us get more fun geek gear and more often. In the long term I think an "adequate" profit is necessary for these companies to continue innovating. When a company interested primarily in one area (say, advertising) moves into another area (say, hardware) in a manner that attempts to eliminate the profits from the new area are cause, in my opinion, for concern. In this regard, MS's approach with Surface, while very very challenging to its "partners" (perhaps unfairly challenging), is at least an approach that makes it clear that MS expects a reasonable profit margin on Surface. I don't see such behavior with Google and the Nexus 7.
taligent 14y ago
But it also means that the users will be disproportionately price sensitive. Which as a developer means your options are limited about what price you can charge for your app and hence what type of app you can build.
- BitMastro 14y ago
  Elitism much? What next? Let's target only white people. No, just males! They earn more on average than woman!