Google has partnered with Asus to manufacture and sell the Nexus 7 tablet. Pricing will begin at $199 for 8GB when it goes on sale. This will make it very competitive on price with the Kindle Fire. Writing for All Things D, Ina Fried has a story detailing how difficult it was for Asus to meet Google's demands for the tablet. Included is this gem:

One way the companies managed that is through razor-thin margins. Google is selling the device through its Google Play store, essentially at cost, and also absorbing the marketing costs associated with the device.

“When it gets sold through the Play store, there’s no margin,” Rubin said. “It just basically gets (sold) through.”

Every other manufacturer thinking of building an Android based tablet must be thrilled at the prospect of competing with this no profit device.

If these tablets sell successfully, something I think is a long shot, It'll be interesting to read the stories written in a couple years. If they succeed in taking market share from the iPad, these stories will mimic the current marketplace for Apple's iPhone and Mac computers. Apple holds market shares below 25% in each, but takes better than 60% of the profit. I can't see how Apple loses in the end.

And that's the best case scenario for the competition. If/when Apple releases a 7" iPad Mini, does anyone really think they won't earn at least a 30% profit margin?

Thank you Time Cook and team.

Hat tip to Daring Fireball