Why Nexus Will Heat Up the Tablet Market: Google's Schmidt

Google Executive Chairman Eric Schmidt laid out his strategy for cashing in on the crowded tablet market with the Nexus 7 in an interview with CNBC on Friday.

Taking a swipe at Apple and Amazon , the Nexus 7, will sell for $199. In addition to being three-times cheaper than the iPad, Schmidt noted the tablet has more apps in some cases. “Competition is good and it will drive the prices down for everybody,” Schmidt said.

Google is also optimistic about its mobile-phone business.

"We announced that there were 1 million Android phone activations a day, 400 million Android phones already in use," Schmidt said. "Do the math. We're on our way to one billion Android phones."

He told CNBC that the Android platform and competition among all the hardware manufacturers "is working."

“The underlying trend here is mobility and cloud computing,” he said.

The cloud opportunities are also big for business.

“The enterprise business should be a cloud business,” Schmidt said. “Why should a company care where the data is as long as it's secure and in the cloud?” Once the data is in one place, you can run all your business analytics off it.

“That transformation is as big as the Y2K spending and will occur over a decade,” Schmidt noted.

— By CNBC.com's Justin Menza.