Google Nexus 7 Snapdragon CPU Lowers Cost; iPad Mini 2 Shrink AAPL Profits

By Hilda Scott , Apr 25, 2013 04:17 PM EDT

Earlier reports suggest that Google will offer a new processor in its new Nexus 7 tablet expected to launch this July. Qualcomm's Snapdragon processor (most likely the Snapgragon 800) will power the device, as Google switches from the NVIDIA Tegra 3 chip used in the original Nexus 7.

The new Nexus 7 tablet, made by ASUS, will enter the market with a wide range of mid-sized tablet devices. Google wants to have the edge on the competition by offering an affordably priced tablet. Competing 7-inch tablet devices on the market now are Amazon's Kindle Fire, Kindle Fire HD and Barnes & Nobles' Nook HD. The 8GB Kindle Fire sells for $159 and the 16GB Kindle Fire HD sells for $199. The 8GB Nook HD tablet is priced at $199 and the 16GB version is $299. Google aims to ship 8 million Nexus tablets and may offer the new tablet for $149 or $199, according to sources in a Reuters report.

"This is the 'zero margin strategy.' Ninety-seven percent of Google's revenue comes from advertisement, so it needs to sell more mobile devices in order to reach more consumers," Fubon Securities analyst Arthur Liao said.

According to anonymous sources, Google was said to have gone with Qualcomm for "power reasons," and compatibility may also be a factor. The processor switch could mean that it's likely Google wants to include LTE support in the new Nexus 7 tablet. Qualcomm's Snapdragon processors offer integrated LTE, while NVIDIA's Tegra 3 requires a third-party modem.

Whatever the reason, Google wants to keep costs low so the next gen Nexus 7 can hopefully outsell its competitors. There are many consumers who don't want to shell out many hundreds of dollars for a tablet device. The iPad mini is priced at $329 and the 16GB Samsung Galaxy Tab 2 sells for $350.

As reported by Stabley Times, Apple is currently suffering a profit margin loss, and its upcoming iPad mini 2 with Retina Display may be to blame. Investors who purchased AAPL stock are worried about what the year holds as far as profits go. Revenues for Apple may be on the rise, but the pressure in a competitive market lowered the percentage of profit from sales. The higher cost of the Retina Display screen technology reduces the profit margin on the iPad mini 2 while the price stays the same. The price for the iPad mini may even be lowered by Apple to remain competitive with the upcoming Nexus 7 tablet that Google has in the works. 

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