[frazerb]

I struggle here with Google's business model, and the impact their efforts have on other Android tablet vendors. At this price point the profit (if there is any to speak of) must be wafer-thin.

But Google can handle such wafer-thin margins because the secondary markets that this tablet secures for them. No other Android tablet vendor can enjoy the same control over the underlying OS, the same footprint in terms of Apps ecosystem (and importantly the revenue derived from this), the same intimacy between online applications/services and hardware. All these things mean Google can 'get away' with pricing this tablet as cheaply as they do.

But where does that leave Samsung, LG, and the others ? The big risk for us as consumers here is that Google will in fact reduce, not increase, the amount of credible competition against Apple by jeopardizing the competitors' capacity to derive profit from tablets.

[AncientPC]

The PC hardware industry profits are already razor thin, while the laptop industry is marginally better. This doesn't mean an ecosystem can't exist.

Amazon retail / grocery stores are another example of an industry that survives off volume to make up for razor thin profit margins.

[jonny_eh]

But it's Apple that already has this advantage, controlling the HW and the app/media ecosystem. Someone needs to step in and compete with that, and it looks like Google (and MS someday?) is the only one in a position to do that.

These other vendors like Samsung just aren't hitting it off. So it's a choice of "Apple and a bunch of overpriced tablets that can't compete" or "Apple and Google". Despite there only being two options with the latter, at least the second option is actually viable.