Nexus 7 is killing the iPod Touch

Google’s Nexus 7 retails at US$199 for the 8GB version and guess what…so does Apple’s iPod Touch. So with the iPod touch, would you trade it up to a iPad Mini for say 150 dollars more? I believe that Apple will not kill the iPod touch just to position itself in a price bracket to counter that of the Google Nexus 7. Instead, they will price the product higher, at between 250 and 350.

I also believe that they will try to lower the screen resolution size as retina displays are just far too expensive. Apple will do well to offer a screen pixel count similar to that of the Nexus 7.

Hardware wise, it could have the same cameras on the current line of iPod touches and with 8GB and 16GB flavors to match the Nexus 7.

Value Proposition

In terms of fair value, the 199 Nexus 7 is far better than the iPod touch. The Nexus 7 will not compete head on with a mini iPad for one reason, Apple still commands a premium over their hardware. Apple will never lower it’s value by playing on price alone. That said, the majority of Android tablet makers made the mistake of releasing hardware that essentially cost the same as the iPad, such stupidity on the side of the manufacturers is not uncommon and this is the reason why Android tablets never gained the  upper hand in market expectations.

Android 7 versus mini iPad

The mini iPad, should it be positioned in the 250 – 350 price class will only do one thing, it will wipe out a slew of Galaxy Tabs, Xooms and the Toshiba Excite  and Toshiba Thrive  as well as a variety of 7 inch tablets. I really do like the Toshibas but they are priced far too high in the food chain. Toshiba should learn that it cannot command a premium like the Apple tablets as it is not seen as a viable alternative.

The iPad mini will not wipe out the market occupied by the Kindle Fire or Nexus 7 because Apple does not believe these tablets are in the same league. In terms of consumption, any tablet with a good screen to watch video and play music will probably save the day. The extras like apps are not a big factor in terms of revenue. Just do the maths, if Apple paid out 4 billion over the course of five years to app developers, this means that Apple made roughly 1 billion+ in that five year period. That said, this does not compare to the amount of revenue it generates through hardware sales like the iPhone or iPad directly.

The iTunes store for music and movies doesn’t nearly make as much money for Apple. The margins for selling these media items are even lower and iTunes store around the world are not seeing hefty gains in profit even when more of such stores are set up around the world.

Conclusion

If you are in the market for consuming media, Android tablets will offer a cheaper price point to Apple tablets. However if you are in the market for a branded device for consuming media, there is no denying that the mini iPad will offer a far more attractive option to Android’s 10 inch and premium 7 inch devices.

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