Last week, Google announced its Nexus 7 tablet. It doesn’t target Microsoft’s Surface, even though their capabilities overlap, or Apple’s iPad. Instead, it will compete with Kindle’s very hot and successful Fire. But even though millions have been sold, the Fire still will feel the heat from the Nexus. The capabilities and $199 price are identical.

Google isn’t a hardware company. Its earlier smart-phone effort using the Nexus name wasn’t a hit. But this tablet might be the turning point for Google’s hardware efforts. The Nexus 7 didn’t come from Google’s new hardware resource, the recently acquired Motorola Mobility cell-phone company. Instead, Asustek Computer—a well-known laptop company and previous Google partner—is making the Nexus 7.

The tablet’s hardware and software are impressive. The screen is a backlit 7-in. display with a scratch-resistant Corning Glass surface and 1280- by 800-pixel resolution. That’s not as great as the retina display on the iPad, but it’s more than the Fire’s 1024- by 600-pixel screen. The Nexus 7 also has a front-facing camera and weighs 0.75 lb.

Inside, there’s an Nvidia quad-core Tegra 3 processor with 1 Gbyte of RAM. Internal flash storage is 8 Gbytes. I/O is a micro-USB. Other hardware goodies include a microphone, accelerometer, GPS, magnetometer, and gyroscope. Wireless includes Wi-Fi 802.11b/g/n, Bluetooth, and near-field communications (NFC). The operating system is Google’s latest Android 4.1, known as Jelly Bean. Other software includes gmail, Chrome, Google+, and YouTube. That’s a lot of goodies for $199. But apparently, Google isn’t expecting to make a profit on the hardware. Instead, the company wants to sell you things on Google Play.

Google Play is like Apple’s iTunes and Amazon’s store (see the figure). It offers a wide range of entertainment options like books, magazines, movies, games, and Android apps, with something for everyone. That strategy seems to be working for Amazon with the Fire, so it should work with the Nexus 7.

With Kindle Fire such a success, I expect Nexus to do well too. It will give Amazon fits, and it will really irritate Apple. The iPad is hard to touch competitively, but its lofty $499 starting price is well beyond the resources of many. Why not get a Nexus or Fire for $199 and save the $300 for other stuff? You can get buy a lot at Google Play with that $300 and really load the Nexus up, after all.

Nexus is helping to more clearly define the tablet spectrum. With Fire and Nexus at the low price end and Apple and Microsoft at the higher end, there may even be room for something in between. Maybe. Tablets come and go so fast, it’s almost impossible to keep up.

HP’s tablet lasted only months and had the shortest life of all. RIM’s Playbook didn’t last long. And Cisco just cancelled its Cius. Did you even know about the Cius? I didn’t until I saw the news of its demise. It was more of an enterprise tablet for business collaboration rather than a popular consumer device.

Anyway, I expect the Nexus to be a hit. Will Apple make a competitively priced version of the iPad? I doubt it, but we may see an Amazon Kindle response. It doesn’t get any better for the consumer.