Nexus 7 Is Almost Perfect -- Except for One Thing

NEW YORK ( TheStreet) -- One year after the original, Asus and Google ( GOOG) once again partnered to create a new Nexus 7 tablet. In brief, my testing has found that it's the best tablet in its class and I strongly recommend it, especially the upcoming SIM-unlocked LTE version.

However, Google and Asus could have added an even better Nexus 7 version if they had just read the market demand correctly. I will tell you how shortly.

But first, what about the Nexus 7 as it is? Physically, it happens to be the market's most well-designed seven-inch tablet, for two main reasons:

1. It's narrow, with minimal bezels on the left and right sides -- although the upper and lower bezels are anything but narrow. This shape makes the Nexus 7 into the iPhone 5 of tablets, in terms of how easy it is to hold in one hand.

It also would have made the Nexus 7 suitable as a phone -- but more about that later.

2. It's got a very grippy rubbery backside, stretching around the edges. This is key for any handheld device: It must not be slippery! It's remarkable that most device makers frequently miss this. Asus and Google didn't miss, this time.

Then you combine these superior physical traits with the market's best display of its kind right now, 1200x1920 in this seven-inch size. The result? A display doesn't get much better than this.

Under the hood, the specs are largely similar to last November's Nexus 4: Qualcomm ( QCOM) Snapdragon CPU, Adreno 320 graphics, two gigs of RAM, and it comes in 16- and 32-gig storage versions. Basically, one of the fastest tablets on the market.

Software-wise, the one new thing that sets the Nexus 7 apart by virtue of the new Android 4.3 OS is its ability to have multi-user accounts. I've been calling for this on tablets since at least this article published March 15, 2010:

Well, although a very mild version of multi-user login was introduced with Android 4.2 less than one year ago, the new version in 4.3 improves the situation materially. You can now not only add additional user accounts, but also restrict each of them just like you can do on most PCs. This is long overdue, and well ahead of what iOS offers right now.

The most important point about the Nexus 7, however, is the LTE version, which becomes available in August for $349 SIM-unlocked and with 32-gig storage. It is the first unlocked LTE device in the U.S. market that can work on three of the biggest wireless operators from the same SKU device: Verizon ( VZ), T-Mobile ( TMUS) and AT&T ( T).

In other words, if you buy the LTE version of the Nexus 7, you can swap SIM cards as often as you like between AT&T, T-Mobile and Verizon. This will force these companies to play against each other with the best possible rates. For example, you can go to Wal-Mart right now and get a $30 per month data plan from T-Mobile.

From a software perspective, Google has now plugged one of its two major shortcomings compared to Apple ( AAPL) and its AirPlay. This is called Chromecast and the device costs $35, or a lot less than Apple's $99. Just plug it into your TV's HDMI port, and you can now get your PC's, tablet's or phone's video or audio content onto your home entertainment system.

Google now has only one box to check in order to convince me to get rid of my remaining iOS device: podcasts. Google and Android need a competitive native podcast player, just like it has a music and a movie player that's native on the Android deck.

The fact is that many people are wedded to their podcasts, either for educational or entertainment audio or television purposes. Podcasts need to be updated automatically, but only over WiFi unless you make an explicit exception, and they need to be stored locally on the device -- not streamed. They also need to work on all of your devices, with synchronized bookmarks, even though the libraries will likely vary from device to device as a result of different storage capabilities.

The most important point: Why not make a phone out of Nexus 7?

Let's say Google and Asus will sell three million Nexus 7 devices the next couple of quarters. I have an idea that would enable to Google and Asus to sell probably five times as many of them:

Include full phone functionality with the LTE version of the Nexus 7!

Yes, a seven-inch phone. When you hold the Nexus 7 in your hand, you realize that this the perfect device to replace both your smartphone and your tablet. Thanks to its improved form factor and non-slippery backside, you can hold it in your hand -- at least if you have large hands -- just like a large smartphone.

In order to enable the LTE version of the Nexus 7 to also be a proper GSM phone, it would need to add some bands to its baseband chip from Qualcomm, some antenna and RF front-end components, and microphone plus speaker in the right place, just like every other smartphone. This would likely bump the price from $349 to $399.

The current seven- to eight-inch tablets from companies such as Samsung and Apple currently make the big mistake of not being a proper phone as well. This forces the user to also carry a smartphone. Seeing as these devices (smartphone + tablet) are almost identical otherwise, it means that many of these tablets end up going unused after the initial honeymoon period.

Basically, if you now have a five-inch smartphone (as opposed to a four-inch smartphone), you will end up reaching for the smartphone more than the tablet. However, if the tablet had the same full phone functionality, you would be using the tablet instead of the phone.

People make fun of this concept because they claim people don't want to put a seven-inch phone up to their heads (ears). However, many people simply don't make that many calls -- but they must make some -- or they use Bluetooth or some other wired headset for frequent calling. They just need to put the device up to their head from time to time, and therefore don't care much that it's a larger one.

The Asus Nexus 7 gets an almost flawless grade for what it is, especially in the upcoming LTE version. I just wish the Asus and Google product definition, management and planning people better understood where they needed to take the product to make it a far greater sales success than it is likely to become.

Including full phone functionality in the Nexus 7 is not a difficult engineering exercise. It can be done and would add $50 to the consumer's price. It just needs the understanding by the product definition and planning people to see where the market is going.

Right now this is virgin territory that is starving to be satisfied. The Nexus 7 would be the perfect seven-inch full LTE phone.

At the time of publication the author was long GOOG, AAPL and QCOM.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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