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)

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.