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Google's Next Nexus 7 Is Coming

By Evan Niu, CFA - Apr 3, 2013 at 6:00PM

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The search giant is preparing to launch a second-generation model of its flagship tablet, according to Reuters.

If there was any doubt that Google (GOOGL 2.37%) was gearing up to launch a second-generation model of its popular Nexus 7 tablet, Reuters is now chiming in with a fresh report that the search giant is targeting a July launch for the next iteration. That would put the Nexus 7 in a one-year product cycle, since the first one was unveiled to the world last July.

First-generation Nexus 7. Source: Google.

The company is reportedly sticking with Asus as the manufacturer of choice, although Big G may be ditching NVIDIA's (NVDA 1.22%) Tegra for the applications processor in favor of a Qualcomm (QCOM 0.40%) Snapdragon. That's in line with what Pacific Crest analyst Michael McConnell predicted in February, believing that Google was planning to use a Snapdragon APQ8064.

Reuter's anonymous sources say that Google gave both chip makers a fair shot, but ended up choosing Qualcomm due to better power efficiency. The Nexus 7 was one of NVIDIA's two biggest tablet wins last year, with the other being Microsoft Surface, and Qualcomm may be muscling in on its tablet turf.

Pricing is still up in the air, and Google is reportedly contemplating keeping the same $199 price point or dropping down to $149. The search giant may be hoping to sell upwards of 6 million to 8 million units of the second-generation model during the latter half of the year.

Some analysts believe that Google shipped 4.6 million of the first-generation Nexus 7 during the second half of 2012. IDC pegs Asus total tablet shipments at 5.5 million during that time frame, showing just how much the OEM has benefited from the Nexus 7 partnership, since those figures imply that the Nexus 7 comprises 84% of its tablet volumes. Asus is targeting 12 million in total tablet units in 2013. (AMZN -0.03%) is Google's primary competition in the $199 price segment for 7-inch tablets, and the e-tailer has also set precedent for an annual product cycle with refreshes every September. Amazon's third-generation Kindle Fire should be due out just a couple months after the second-generation Nexus 7 hits, and maybe Amazon will finally take the wraps off its Kindle Phone at the same time.

Apple's (AAPL 4.01%) iPad Mini has also become a viable threat in the smaller tablet segment, even though it carries premium pricing. There's been no shortage of speculation on when the iPad maker will launch a second-generation model with a Retina display. Some have thought an iPad event is in store for later this month, but other analysts think Apple's moving the iPad cycle farther back.

Google's next Nexus 7 is coming.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$143.11 (4.01%) $5.52
QUALCOMM Incorporated Stock Quote
QUALCOMM Incorporated
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Alphabet Inc. Stock Quote
Alphabet Inc.
$2,229.76 (2.37%) $51.60, Inc. Stock Quote, Inc.
$2,151.14 (-0.03%) $0.68
NVIDIA Corporation Stock Quote
NVIDIA Corporation
$168.98 (1.22%) $2.04
Microsoft Corporation Stock Quote
Microsoft Corporation
$260.65 (3.20%) $8.09

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