Nexus 7 Is Almost Perfect -- Except for One Thing

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

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

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

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

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

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

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

Under the hood, the specs are largely similar to last November's Nexus4: Qualcomm ( QCOM) Snapdragon CPU, Adreno 320 graphics, two gigs of RAM, and itcomes in 16- and 32-gig storage versions. Basically, one of thefastest tablets on the market.

Software-wise, the one new thing that sets the Nexus 7 apart by virtueof 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 introducedwith Android 4.2 less than one year ago, the new version in 4.3improves the situation materially. You can now not only addadditional user accounts, but also restrict each of them just like youcan do on most PCs. This is long overdue, and well ahead of what iOSoffers right now.

The most important point about the Nexus 7, however, is the LTEversion, which becomes available in August for $349 SIM-unlocked andwith 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 fromthe 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 canswap SIM cards as often as you like between AT&T, T-Mobile andVerizon. This will force these companies to play against each otherwith the best possible rates. For example, you can go to Wal-Martright now and get a $30 per month data plan from T-Mobile.

From a software perspective, Google has now plugged one of its twomajor shortcomings compared to Apple ( AAPL) and its AirPlay. This is calledChromecast 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 homeentertainment system.

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

The fact is that many people are wedded to their podcasts, either foreducational or entertainment audio or television purposes. Podcastsneed to be updated automatically, but only over WiFi unless you makean explicit exception, and they need to be stored locally on thedevice -- not streamed. They also need to work on all of yourdevices, with synchronized bookmarks, even though the libraries willlikely vary from device to device as a result of different storagecapabilities.

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 nextcouple of quarters. I have an idea that would enable to Google andAsus 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, yourealize that this the perfect device to replace both your smartphoneand your tablet. Thanks to its improved form factor and non-slipperybackside, you can hold it in your hand -- at least if you have largehands -- just like a large smartphone.

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

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

Basically, if you now have a five-inch smartphone (as opposed to a four-inchsmartphone), you will end up reaching for the smartphone more than thetablet. 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'twant to put a seven-inch phone up to their heads (ears). However, manypeople simply don't make that many calls -- but they must make some --or they use Bluetooth or some other wired headset for frequentcalling. They just need to put the device up to their head from timeto 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 andGoogle product definition, management and planning people betterunderstood where they needed to take the product to make it a fargreater sales success than it is likely to become.

Including full phone functionality in the Nexus 7 is not a difficultengineering exercise. It can be done and would add $50 to theconsumer's price. It just needs the understanding by the productdefinition 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, AAPLand QCOM.

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

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