Kai also uses cheaper DDR3L memory, according to Nvidia officials who spoke at an investors meeting of investors in May.
While some analysts Monday speculated the quad-core Tegra 3 processor would raise Google's costs and require hundreds of dollars in subsidies per machine, the Kai design could change the equation.
"It's entirely possible" the Nexus 7 could have materials costs of about $200, lessening the need for a big Google subsidy, said Tom Mainelli, an analyst at IDC. "Or maybe Google's selling it at close to cost at first, they get below $200 as the Nexus 7 gets traction and they ramp up production."
Jack Gold, an analyst at J. Gold Associates, said it's possible for Google to keep its costs low, as other Android tablet makers have done. The 7-in. Acer Iconia Tab A110, shown at Computex earlier this month, is expected to sell for less than $200, and will also include a quad-core Tegra 3 processor.
The Kindle Fire, Amazon's 7-in. tablet, has been the most popular 7-in. tablet model, and sells for $199. A next-generation Fire is expected in July. Amazon changed the Android interface in the Fire and refers all its users to Amazon services, not Google services.
Since there are other comparable machines on the market, the question for Google with the Nexus 7 is how it will distinguish itself, analysts said. Most agreed it will have to be through tablet applications built by third-party developers and Google services. Including the next version of Android, known as Jelly Bean, expected to be Android 4.1, will also add some distinction.
Gold cast some doubt that Google would do well by building a "cheap, 7-inch tablet with limited display resolution and lower end chips and less memory ... Google can't do it any cheaper than Asus, Acer, Lenovo or others and still have a markup that makes money."
If Google "goes the low-end route like Kindle did, then Google will be showing a device that won't compete well with [ Microsoft] Surface tablets, or the Asus Transformer ... In my opinion, Google needs to go the high road and show a killer tablet in order to stimulate the market. A low-end device just won't build the excitement they need."