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Obstacles face Nexus 7's success in Asia

27 July 2012

Google's first tablet to pressure Asian low-cost vendors but lack of localized app and built-in connectivity to hinder uptake.

If Google Nexus 7 tablets are introduced into the Asian market, its pricing will affect local low-cost tablet players. However, its adoption will be hindered by the lack of localized applications and lack of instant connectivity, say analysts.

The 7-inch Nexus 7 is Google's flagship tablet running on Jelly Bean--the latest version of the Google Android mobile operating system. The 8 gigabytes (GB) version of Nexus 7 retails at US$199 in the United States while the 16GB model sells for US$249.

The device started shipping on July 20 in the United States and will be available in Canada, the United Kingdom and Australia. When contacted, Google was not able to comment on the release dates for Asia or if the devices will be available in the region.

When the Nexus 7 eventually arrives in the Asian market, local vendors as well as white box tablet makers with unbranded devices will be affected by its price, said Tracy Tsai, research director at Gartner.

Local tablet vendors' sales volumes, pricing and profit margins will be affected, said Tsai. "Price is important particularly for price sensitive buyers but so is the brand and quality and service," she added.

More pressure on high-cost, than budget tablets However, budget tablets are likely to still have a niche in markets such as India, according to Priyanka Khandelwal, research analyst for electronics division at market intelligence firm 6wresearch.

Khandelwal believes that tablets from local vendors that are priced lower than the Nexus 7 will be purchased by the middle class users, while the Google tablet will appeal to the generally more brand conscious upper and upper-middle class consumers.

He noted that locally-made devices, such as HCL's Me tablet which retails at US$145 and Micromax Funbook which sells at US$122, will be tough competition for Nexus 7.

"Being a price-sensitive nation, price plays a very crucial role to attract the masses. If we evaluate the prices of the above three tablets, there is a difference of around 37 percent to 63 percent when compared with Google Nexus 7," said Khandelwal.

Therefore, Nexus 7 will more likely emerge as a winner when competing with bigger brands such as Samsung and Apple in India. However, the low-cost players will gain the maximum of consumer's wallet share in the mass market, he said.

Nexus 7's challenges in Asia Tsai pointed out that distribution and channel might be an issue for the initial sales of the Nexus 7 if it does come to Asia. White box tablets are available widely in retail, but the Nexus 7 can only be purchased from the Google Play online store.

However, serious or experienced buyers will not have an issue getting a Nexus 7 as long as it is offered on the Web site or retail store in Asia pacific, she noted.

That said, the tablet faces serious "hyper-local" challenges in the Asian market. Jeff Orr, senior practice director for mobile devices, content and applications at ABI Research, said the attraction for a tablet is dependent on the variety of applications available for the OS. "Google Nexus 7 would not have a distinct advantage over other Android-based tablets in this regard," he said.

"We remain skeptical that most Asia markets will adopt tablets that do not offer a truly homologated experience--one that not only presents a local language interface, but also a breadth of content that is both affordable and culturally compelling," Orr said. The senior practice director noted that connectivity is also an issue for Nexus 7. "Low-cost tablets assume Wi-Fi connections which ABI Research observes remain sparse in most Asia markets," he said.

Orr said this was reflected in how many users in China showed interest in saving up for the 3G iPad, instead of the Wi-Fi version, as they do not have much opportunity to connect to a Wi-Fi service to download applications.

Not having easy or instant access to the Internet is "counter-intuitive to the goals for a mobile device", he added.

Singapore-based consumer Nicole Nilar said she was still undecided if she should choose a Samsung Galaxy Tab 2 or a Nexus 7. "Currently I am using Samsung Galaxy S2 and totally love it for the sleek design, duo-core processor and durability," she said.

However, she was attracted to the pricing of the Nexus 7 and its technical specifications. "US$199 (S$249) for a 1.3GHz Nvidia Tegra 3 quad-core processor plus 1GB of RAM is very attractive price," she said.

That said, Nilar noted she is unsure about buying low-priced tablets because of quality concerns.


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