One of the models will be priced at US$199 while the other will be priced US$99, and both models are expected to hit markets by the end of 2012, added the sources.
The sources speculated that Google is preparing for increased competition from Apple when the reported 7.85-inch iPad is released in the fourth quarter of 2012, and wants its device to maintain growing sales.
Yeah, I'm not so sure they have the time frame correct but I do think a cheaper tablet is coming. It's my guess that the Nexus 7 lite will have the same screen and still run Jelly Bean, but instead of the Tegra 3 CPU found in the Nexus 7 I expect the $99 lite model to run on a dual core CPU.
Th reason I believe in this rumor is because it fits with what I've already seen on the market. There are any number of decent $99 tablets out there, and all those devices are being sold by smaller tablet makers at a profit. That means Google and Asus could design a decent tablet with specs that would place the price around $150. Google would then sell the tablet for $99. That is pretty much what Google did with the Nexus 7.
Google's flagship 7" tablet is selling for somewhere around the cost of materials, with Google's profit margin coming from content sold in Google Play. It's also what Amazon is now doing with their Kindle hardware. And if Google is successful in using this business model on the Nexus 7, it is a near certainty that they will repeat their success with cheaper hardware.
But I still think the time frame is off. I think the Nexus 7 Lite will be unveiled right around CES 2013. It will be the tablet everyone writes about. Unless of course Google decides to unveil it in time for Black Friday, which would be another good choice.