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(CNN Money)–Apple — with its market-leading gadgets and astounding market cap — may appear to rule tech.

 But there is one category in which it is not setting the pace: mini-tablets. Rumors of a tablet smaller than the iPad abound, but so far nada. Why would Apple even delve into the category when the iPad trounces every other tablet out there? There’s a market for a smaller form factor. Amazon’s spartan, $200 Kindle Fire sold well last holiday shopping season for instance.

Google’s Nexus 7 really shows the potential of the segment, however. Analysts and reviewers have characterized it as the product to put out the Kindle’s flame. Until recently, Google has been developing its mobile operating system for phones and tablets used by Samsung, Asus, HTC, Amazon and many others. With a direct-to-consumers model, Google wants a piece of the content consumption market via its own media store, Google Play. Question is, can the Nexus 7 eclipse the Kindle Fire and compete with whatever Apple may unveil in the coming months?

At $199 for the 8GB model, $249 for 16 GB, the Nexus 7 should be very attractive. In a weak economy, there is real demand for a lower priced device that can be easily held in one hand. Can you browse, shop, read, watch videos, movies, TV shows and play games on the Nexus 7? Yes, you can, and it puts the Kindle Fire to shame says virtually every tablet reviewer and analyst out there. Where Apple prices its smaller iPad will be a factor: you can assume the company is not about to give up per-device margins.

The Nexus 7 utilizes Android 4.1, also known as Jelly Bean, Google’s latest tablet operating system. It is zippy and responsive. With 9 to 10 hours of battery life and weighing in at ¾ of a pound, it boasts a 1280 x 800 resolution with scratch-resistant glass, a front-facing camera and Wi-Fi. Amazon, for one, should be nervous. Google’s hardware partners selling tablets with older versions of Android will be playing catch up. Right now, the Nexus 7 with the optimized Jelly Bean OS is heralded as the best mini tablet available.

Yes, Apple has a major advantage with its gorgeous retail outlets. But unlike Google’s ill-fated Nexus phone, the Nexus tablet has strong retail distribution at Sam’s Club, Sears, Gamestop, Costco, Fry’s and Office Depot. That puts it ahead of competitors — ones that run its own operating system.

Android is a popular mobile OS brand, but it’s an engine and not the car. Nexus 7 is the shiny new car — a complete experience — at a reasonable price. More broadly, Google’s push into building its own hardware is likely to give it a chance to really showcase what its software can do.

Google would not comment about its future marketing plans, but did say it had a television ad that ran during the Olympics. By getting its tablet out early, it has given itself an advantage. If competitors don’t significantly improve their offerings for the holidays, it will have an even stronger head start.



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