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Google Launches Nexus 7

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Internet search giant Google Inc. (GOOG) unveiled its second-generation Nexus 7 tablet, powered by Qualcomm Inc.'s (QCOM) Snapdragon processor. Google will start selling its flagship tablet from Jul 30, 2013 in the U.S through its online store.

The second-generation tablet has a better screen resolution and a thinner design. Google decided to install Qualcomm's chip, replacing Nvidia Corp's (NVDA) Tegra 3. Tablets with fast processors offer improved performance and therefore enjoy steady demand. . With a new powerful processor for its second generation Nexus tablets, Google hopes to make inroads into the overcrowded tablet market. The different versions sell at $229 to $349

Apple Inc. (AAPL) is primarily a hardware vendor and therefore greatly dependent on device sales. The company is likely to maintain its leadership position with the soon-to-be-launched next-generation tablet, iPad 5.

According to IDC, Apple’s shipped 19.5 million tablets in the first quarter of 2013. In the process, Apple captured 39.6% of market share, followed by Samsung’s Galaxy line of tablets with 17.9% share, Amazon’s Kindle Fire with 3.7% and others making up the rest. Google is way behind its competitors but its Android-based tablets are gaining on iOS-based tablets every day.

Further, IDC predicts that tablet shipments may reach 350 million by the end of 2017. It also predicts that smaller screen sizes i.e. 7 inch and below may become more popular as consumers prefer smaller devices for daily use.

In the second quarter of fiscal 2013, Google reported solid earnings of $7.81 per share that missed the Zacks Consensus Estimate by $1.23 or 13.7%. Google’s gross revenue (including total traffic acquisition costs [TAC]) came in at $14.10 billion, representing sequential and year-over-year growth of 1.0% and 19.5%, respectively. Google’s standalone revenues grew 1.2% sequentially and 19.5% year over year but Motorola’s growth rates continued to lag.

Google has a Zacks Rank #5 (Strong Sell).

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