cheap cell phones: Is cheaper better for Google?

The cheap cell phones Nexus 7 tablet will turn one in July, and a new report claims that Google plans on giving the popular slate a makeover to celebrate. Annual makeovers are nothing new for gadgets, but Reuters reports that Google might have a trick up its sleeve for this particular refresh: An even more wallet-friendly price tag for the already cheap tablet.

Google never disclosed sales figures for the Nexus 7, which is manufactured by Asus, but according to analytics firm Localytics Google¡¯s tablet owns 8 percent of the cheap watches global Android tablet market share, trailing Amazon's Kindle Fire family (33 percent), Barnes & Noble's Nook (10 percent), and Samsung's gaggle of slates (9 percent). Asus previously said Nexus 7 sales approached some 1 million per month.

Even without any solid sales figures from either party, it¡¯s clear that Google¡¯s main rival in the Android tablet market is Amazon Kindle Fire line, which starts at $160 for the original model or $200 for the new and improved HD version. Selling a previous model at a discount price is not a new strategy: Apple has selling the iPad 2 alongside the subsequent iPads for over a year now.

It appears Google has yet to decide how it will price the new Nexus in order to be more competitive with Amazon, which doesn¡¯t mind selling its cheap tablets as cheaply as possible in order to push digital content like books, movies, and music. One possibility is that Google will maintain the Nexus 7 pricing at $200, while discontinuing the old model. Ho-hum.

The other, more sdsafWS2 intriguing possibility put forward by the one of Reuters' sources suggests that Google might price the new tablet even more competitively at $149 in a bid to gain market share for Android tablets.

According to iSuppli¡¯s teardown analysis of the original Nexus 7, it costs Google and Asus around $170 to manufacture the slate. Reuters¡¯ sources indicate we could see a higher-resolution screen and a thinner bezel for in the second-generation Nexus 7, while the heart of the beast is said to swap out Nvidia's Tegra 3 processor for a more energy-efficient Qualcomm processor.

Considering the economy of scale, Google might be able to break N9500 S4 even or incur a small loss to get the new Nexus 7 in the hands of more people at $150, albeit at the likely chagrin of its manufacturing partners.

Selling that kind of cheap cell phones firepower for $150 doesn't leave a lot of room for other hardware makers to eke out a living. If Google decides to slash prices that far it risks facing a manufacturer mutiny, threatening the long-term viability of Android as platform in a quest for quick boost in adoption rates.