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Google Inc (GOOG)’s Moving On Up With the Next Nexus 7

Google Inc (NASDAQ:GOOG)‘s Nexus 7 has been an unqualified success. After seeing, Inc. (NASDAQ:AMZN) bank on its $199 Kindle Fire in 2011, the search giant jumped right in at the same price point with the Nexus 7 last summer. The Nexus 7 helped manufacturer ASUS outship Amazon in the first quarter, even after Amazon responded with second-generation Kindle Fire HD models.

Google Inc (GOOG)

Even Apple Inc. (NASDAQ:AAPL) has now entered the small-sized tablet market with the iPad Mini, acknowledging the growing consumer preference toward smaller form factors (and lower price points). Google Inc (NASDAQ:GOOG) I/O is now in the rearview mirror, and many investors were expecting Big G to unveil a second-generation Nexus 7 at the developer conference, to no avail.

DIGITIMES now reports that Google Inc (NASDAQ:GOOG) is about to move up with the next Nexus 7, pricing the device at $229 for a 16 GB model. That modest price increase would distance the device from entry-level models and put it more in the mid-range ($199 to $249), while Apple Inc. (NASDAQ:AAPL) sits at the high end with $329.

The low-end tablet market continues to head lower, after, Inc. (NASDAQ:AMZN) reduced the price of its first-generation Kindle Fire to just $159 and Hewlett-Packard Company (NYSE:HPQ) now sells its Slate 7 for $170. ASUS also targets the sub-$159 market with its own branded tablets, along with other OEMs like Acer.

By most measures, the current Nexus 7 trumps the Kindle Fire HD. Both devices have similar hardware but the Nexus 7 runs a full-featured stock Android with a much larger app ecosystem. In that sense, Google Inc (NASDAQ:GOOG) may be able to convey a higher value proposition than, Inc. (NASDAQ:AMZN), especially since the Kindle Fire doesn’t include popular Google services like Maps.

Over the next six months, investors can expect Google, Amazon, and Apple Inc. (NASDAQ:AAPL) to all update their small-sized tablet offerings. Pricing slightly higher would help ASUS preserve margins, while, Inc. (NASDAQ:AMZN) will assuredly maintain its characteristic loss-leader strategy. Apple may be able to pack in a Retina Display in the upcoming iPad Minis, cementing its status as the premium device.

The real question now: Where will Microsoft Corporation (NASDAQ:MSFT) price when it shrinks its Surface?

The article Google’s Moving On Up With the Next Nexus 7 originally appeared on

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends, Apple, and Google. The Motley Fool owns shares of, Apple, Google, and Microsoft.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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