Original URL: http://www.theregister.co.uk/2012/09/27/asus_rumored_to_reject_99_dollar_nexus_7_rumor/

Rumour: Asus rejects $99 Nexus 7... rumour

Google to massive subsidise hardware at last?

By Tony Smith

Posted in Tablets, 27th September 2012 08:50 GMT

Google and Asus won't be releasing a $99 (£61) Nexus 7 tablet, the second of those two partners has insisted.

Somewhere on the internet, someone has suggested that the pair have just such a plan in mind. The $199/£159 price point will be maintained for a higher spec model, goes the theory, while the pared-back entry-level model will go on sale for a hundred bucks.

Somewhere else on the internet, somebody has claimed Asus has rejected that rumour.

When the current incarnation of the current Nexus 7 was released, calculations based on a disassembly of the device and an examination of the bits it contains suggested that it was costing Google and Asus $159 (£93) to buy all the components and put them together. After taking out reseller margins, shipment, packaging, software development and everything else it takes to get the device into punters' hands, that doesn't leave a lot left over.

Google Nexus 7 Android tablet

That goes double if Google dropped the price to $99. Reducing the storage capacity to 4GB would help, ditching GPS and maybe reducing the screen resolution too, but there's not a lot else to drop to reduce the bill of materials cost.

Not that Google needs to. It's not short of a bob or two, and could subsidise the hardware on the back of the money it hopes to make selling content through its Google Play shop to which the Nexus 7 is tightly tied.

It's often said that tablets and e-book from retailers like Amazon, Barnes & Noble, Kobo and now Google are subsidised by content sale profits, but teardowns have thus far revealed that not to be the case, or at least the subsidy to be so small as to be negligible as the basis for a business model. If the rumour is correct, perhaps Google has at least decided to see if it can be. ®