Is Apple's Tablet Loss Google's Gain?

With Apple's latest quarterly earnings release came news that iPad sales dropped 14% from the same time a year ago. Apple said that when inventory changes were factored in, the drop was actually just 3%, but any slip in iPad sales is a win for the competition. With yesterday's debut of Google's new Nexus 7, is the search giant ready to take on Apple's tablets?

Nope, probably not.

The next iteration of Nexus
Google's Nexus 7 release was well received last year, and this year the tech dominator upped the ante by adding some significant hardware upgrades and releasing it with the Android 4.3 OS.

The new Nexus 7. Source: Google.

The new Nexus 7 sports a 1,920 x 1,200 HD screen, LTE connectivity, a rear-facing 5-megapixel camera, a 1.5GHz Qualcomm Snapdragon S4 Pro 8064 processor, dual stereo speakers, and a battery that can last for 10 hours of web browsing. The 16 GB non-LTE Nexus 7 starts at just $229 -- $100 less than the 7.9-inch iPad Mini.

Despite the popularity of the Nexus 7, Google doesn't dominate the tablet market in terms of devices -- though its Android OS does. In the first quarter of 2013, Apple and Samsung claimed the top two market share spots, with Asus and taking No. 3 and No. 4, respectively. With Google giving away its mobile OS for free, it benefits from getting its search, maps, and advertising services into the hands of millions of tablet users. Gartner expects tablet shipments to increase by 68% this year, and the company hopes to benefit from both its services and selling its own devices.

Devices are a different game
But in the device market, Google is at a disadvantage. Samsung is dominating the Android tablet market and Apple's shipment numbers seem completely out of reach. The Nexus 7 did push Asus to the No. 3 spot last quarter, though, beating Amazon's 900,000 tablet shipments by almost 2 million. Google's clearly doing something right with the device, but it's still uncertain if it can make itself a top-device contender in a market it helped define with its software.

I doubt Google's tablet -- although seemingly a solid device -- will change Apple or Samsung's strategy. It'd be best for investors to keep an eye on how the Nexus 7 does in comparison to Amazon's Kindle Fire. The two devices are similarly priced and have the same goal of selling products and services, though they they vary greatly on what's being sold.

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Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends, Apple, Gartner, and Google. The Motley Fool owns shares of, Apple, Google, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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