Soneira notes that although the Nexus 7 looks great on paper (1280 x 800 display, 216 Pixels Per Inch, premium IPS LCD), benchmarks competitively (brightness/luminance about 350 nits, contrast ratio about 1,000) and even has a decent color gamut (86 percent versus the iPad 3's 99 percent), but that's where the party ends.
According to his report, images on the Nexus 7 are noticeably washed out, missing highlights, suffering from reduced image contrast, and weak colors. However, darker images look a lot better than brighter ones, which actually tipped him off to the problem:
The Intensity Scale (often called the Gray Scale) is way off. The display's Brightness fails to increase sufficiently for bright image content, causing bright image detail to be compressed and lost. See the Figure (above) for the Nexus 7 and this Figure (below) to see what the Intensity Scale should look like. The Nexus 7 Display Stumbles and Falls Short both figuratively and literally... There is about a 25 percent compression of bright image content, which is quite substantial. This holds for both the Gallery Viewer and the Chrome Browser.
Soniera adds that some OEMs do this intentionally to boost brightness but blames the Nexus 7 bright image compression on "incompetence by the manufacturer." The good news is that it may (or may not) be correctable with a software update.