Google has a lot to prove with the Nexus 7: Does it finally understand tablets, after so much bumbling over the last few years? Can it take back tablet market share from Amazon, which has managed to create the only successful Android tablet with the Kindle Fire? And how can a cheap device take on the high-end iPad?

All of those thoughts were rushing through my head as I tore open my Nexus 7 review unit this morning (Google wasted no time shipping units out after yesterday’s Nexus 7 unveiling). I’ll admit, I wasn’t too excited for the Nexus 7 before its official reveal — but while it may not be revolutionary, it may be just enough to make Android matter in the tablet market.

After a bit of hands-on time with the Nexus 7, I can say that it’s sparking an entirely new tablet war of cheap devices that don’t sacrifice any quality.

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The Nexus 7 isn’t just another Android tablet. It’s the first slate to run Android 4.1 “Jelly Bean,” which is the slickest Android version to date. It’s powered by a fast quad-core Tegra 3 processor, something typically reserved for high-end devices. And it’s also the first tablet Google actually helped to develop (together with Asus).

Best of all, it’s just $199 for the 8-gigabyte version.

In my brief time with the Nexus 7 (a full review is coming later), I was surprised by how speedy and solid it felt. Google and Asus didn’t skimp on the Nexus 7’s build quality: It feels like a device that costs at least twice as much. I have a feeling Google is eating quite a bit of the cost to get the Nexus 7 down to $199. That also explains why the company is working extra hard to push the Google Play ecosystem now — Play purchases could help to subsidize the cost of the device.

I was initially confused as to why the Nexus 7 was competing with the Kindle Fire and not the iPad, but it’s clear now that it’s doing a bit of both. The cheap price will open up the Nexus 7 to just about everyone, but its hardware is also good enough to compete with high-end tablets. With Amazon gearing up a Kindle Fire revamp, it seems that the low-end tablet space is quickly becoming the most interesting.

(Correction: In the hands-on video below, I’m actually looking at the old Google+ app, not the newer one.)

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