Why Google is Creating Their Own Tablet

Tim Bajarin / May 29th, 2012

It is pretty well known now that Google is about to release a Google branded tablet. Sources tell us that it was designed by Asus and made by Quanta. Most expect it to be shown at Google I/O the last week of June and in the market sometime in July.

At first glance, the fact that Google will now be going head-to-head with their partners seems like a bad idea. Google has worked hard to convince partners to back Android and to date, in smartphones and tablets they have had many vendors commit to Android. And partners have taken Google at their word that they would not compete with them if they license Android and help make it successful.

There are a lot of reasons for the lack of Android success in tablets, some related to Google’s missteps in their designs and releases of Android for tablets, but no one can deny Apple’s great iOS and sleek designs that continue to give them an edge over competitive tablets based on Android. And at the vendor level, most Android tablet vendor’s products have paled in comparison to Apple’s iPad in both sleekness in design and marketing execution.

Also, Android in tablets has forked a couple of times already. While Android is the OS of Amazon’s Kindle, it has been optimized and customized to Amazon’s needs and is not considered a pure open and extended version of Android. And Barnes and Noble’s Nook has followed a similar path with their tablet. At the same time, vendors like Samsung, HTC and others have added their own UI and extra features to Android to make it their own.

While this may be good for the vendors, it does not necessarily mean it is good for Google. Yes, most conform to some of Google’s guidelines and include the Google search engine as well as connections to ads. But in some cases, especially the one from Amazon, they are much more interested in driving commerce and ads through their program then adhere to any of Google’s ads and commerce links that benefit Google.

I believe that once Google began to realize they were losing control of Android within the tablet market, they decided that they needed to have a vendor that would adhere to all of Google’s conventions no matter what they were and become the true “poster” child for Android tablets.

And who could do this better than Google themselves. In this scenario, Google would control the integration of the Android OS, the overall design of the tablet itself and all of the ads and eCommerce links tied to a tablet so they would have full control over it. And, they could drive its marketing, distribution and even the customer service needed to make a true Android tablet successful.

The operative word here is “true” Android tablet. Up to now, most Android tablets were true Android tablets only in the sense that they used Android at its core. But as you may know, fragmentation within the Android OS world has been rampant and this has had an impact on Android’s ultimate success in tablets. But Google wants to correct this and insure that Android can be very successful in tablets as well as smartphones.

In the end, they would be basically following in Apple’s footsteps. Although Google professes blind allegiance to an Open Source program, the fact remains that the most successful company in the tech world today turns its back on that model. Apple’s success comes through their control of the hardware, OS and applications eco systems that allow them to deliver complete solutions to their customers. And if Google creates their own Google branded tablet that is tied to its purest version of Android and linked to its own services and apps, this sets them up to finally have an Android tablet that will be truly competitive with the iPad.

I don’t know if Google would have moved in this direction had it not been for Amazon’s decision to use Android and make it the heart of an Amazon “closed” commerce loop. I suspect that when Android was created Google pretty much expected people to follow their program to a “T”. Silly Google.

Apparently Google has decided that it is time to take control of Android in tablets and do their own version that is tied tightly to their own business model. And if their partners get angry with them, then so be it.

One more thing- Although most expect that Google’s tablet will be priced at $199 and go head to head with Amazon’s Kindle, I would not be surprised if they actually go to school on Amazon and do some type of subsidization of their own with this product. We believe Amazon Kindle’s BOM cost is between $209 and $217. The difference in cost to consumer vs BOM is made up through some form of subsidization tied to what people buy on their Kindle’s Fire.

But I would not be surprised if Google matches fire with fire (pun intended) and prices their Google branded tablet at $179 and ties their subsidization to add revenue gained through purchases via their Google branded tablet. If so, this would have a disruptive effect on any Android tablet partners and could also force Amazon to be even more aggressive with their subsidization pricing on future Kindle Fire’s.

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.
  • Jurassic

    It will be interesting to see what happens if Google does subsidize its own branded tablet to a price below Amazon’s Kindle Fire… so low that none of its Android “partners” can compete with it.

    • FalKirk

      How is Google or anyone else going to make money off of such a product?

  • FalKirk

    “The farther back you can look, the farther forward you are likely to see.”-Winston Churchill

    Circa 2005: Google fears that Windows Mobile will become the dominant platform on phones and that Google Search will be banned from mobile and relegated to desktops. They purchase Android with the idea of creating a free, open source competitor to neutralize Windows Mobile.

    Circa 2007: With the introduction of the iPhone, Apple disrupts the mobile phone industry by turning phones into pocket computers. Google – which has not yet released Android into the wild – does a strategic right turn, abandons its plan to create a BlackBerry and Windows Mobile competitor and pits its phone directly against the iPhone instead.

    Circa 2010: With the introduction of the iPad, Apple disrupts the computer industry by removing a layer of abstraction and making touch the primary user input and the tablet the primary computer form factor.

    Android responds slowly and badly.

    First, their initial tablet OS is late, it is a separate entity from their phone OS and is unfinished because it is rushed to market.

    Second – perhaps because they are blinded by their success in the phone OS markets – Google does not recognize the importance of their App marketplace. Rather than taking responsibility for making the Google Marketplace as good and as safe and as organized as it can be, they treat it like a bazaar where any and all can come and sell their wares without rules, without guidelines and without protection. Caveat Emptor (“buyer beware”) rules the store and customers respond in kind by being aware and being afraid and by being unwilling to put their money at risk by buying things from the store.

    Third, Android exacerbate’s its tablet deficiencies by treating tablets as if they were just big phones. Despite the cries of the iPad naysayers, the iPad is not just a big iPod Touch. The programs that run best need to be optimized for the device. Android’s philosophy of “one size (app) fits all (size devices)” sounds great in theory but works poorly in practice.

    Circa 2011: Amazon, Barnes & Noble and every Asian tablet maker known to man (yes, that’s hyperbole) starts to fork Android and create private label tablets. Android may be thriving but Google’s services are being locked out – which is exactly what they feared when they created Android to battle Windows Mobile in the first place.

    Circa 2012: Google reverses course, reneges on open, buys Motorola and creates its own branded tablet.

    Note however, that a branded tablet does not in any way fix the problems inherent in the Google Marketplace (now called Google Play) and Android’s one-size-fits-all App philosophy.

    The strategy reversing course and going head to head with Apple didn’t work for WebOS, Windows Phone 7, or BlackBerry QNX (Rather than fight back, Nokia just gave up and abandoned Symbian and MeGo altogether). At this very late date, why would we expect such a strategy to work for Google?

    “At first glance, the fact that Google will now be going head-to-head with their partners seems like a bad idea.”

    At second and third glance too.

    “Google has worked hard to convince partners to back Android and to date, in smartphones and tablets they have had many vendors commit to Android.”

    True, many partners have committed to Android but only Samsung has profited from Android.

    “The operative word here is “true” Android tablet.”

    On the contrary, the operative word is that this will become a tablet true to Google’s proprietary version of Android. “True” Android is open source. Google’s version is not.

    “In the end, they would be basically following in Apple’s footsteps.”

    Rather than saying that they were following in Apple’s footsteps wouldn’t it be more accurate to say that Google was trying to go head-to-head with Apple? There’s a very big difference between the two.

    “Apple’s success comes through their control of the hardware, OS and applications ecosystems that allow them to deliver complete solutions to their customers.”

    And that’s why it’s a mistake to ape the Apple model. Apple’s already doing it, they’re already doing it extremely well and Apple is the biggest, meanest somofabitch in the room. If you’re going to fight the champ, you don’t do it on his terms and you most certainly don’t do it on his turf. While Google has been very, very good at making creative Beta projects, they’ve shown absolutely no ability to create integrated, end-to-end, software/hardware solutions. Doing what you’re not at all good at doing, and trying to learn how to do it on the fly, and trying to learn it and do it while Apple is trying to beat you to a pulp, isn’t a challenge…it’s a death wish.

    “And if Google creates their own Google branded tablet that is tied to its purest version of Android and linked to its own services and apps, this sets them up to finally have an Android tablet that will be truly competitive with the iPad.”

    Could not disagree more. Not going to happen.

    “Apparently Google has decided that it is time to take control of Android in tablets and do their own version that is tied tightly to their own business model. And if their partners get angry with them, then so be it.”

    Their partners WILL get angry with them and abandon them AND the forking will continue and they won’t be able to stop it AND they won’t be able to compete well with Apple. A lose/lose/lose scenario.

    “One more thing- Although most expect that Google’s tablet will be priced at $199 and go head to head with Amazon’s Kindle, I would not be surprised if they actually go to school on Amazon and do some type of subsidization of their own with this product.”

    This makes absolutely no sense. The purpose of subsidizing the razor (tablet) is to make up for it by selling more razor blades (content) and making more money. Google isn’t making any money on content from Android. Nor are they making much money on mobile advertising from Android. A subsidized Google tablet would just be an additional expenditure with all downside and no upside.

    • Floridaphil941

      No, Google doesn’t make any money on their products. Yep, they are just one big money giving machine, aren’t they?

      The entire point of the article is to point out that Google needs to get the Android market back under its control. There has been way too much forking of the platform with a myriad of different tablet sizes and resolutions while the iPad effectively has one model. Which one do you think developers choose to write for?

      That’s why Google has precisely the RIGHT idea. I couldn’t agree more with them. Whether they succeed or not is an entirely different matter. However, the introduction of a cheap, powerful, vanilla Android experience absolutely has to be the right way to go.

      • FalKirk

        “No, Google doesn’t make any money on their products. Yep, they are just one big money giving machine, aren’t they?”-Floridaphil941

        I know that you are attempting to be derisive but, ironically, you are actually being quite accurate. Google has made almost nothing on Android. They have made far more on iOS. And if you count their R&D and their purchase of Motorola against what they’ve earned, they’ve actually lost billions and billions of dollars on Android.

        Source: “Android’s contribution to Google”, Asymco, May 16, 2012

        And to what end? To what end?

        • BioNerd

          “they’ve actually lost billions and billions of dollars on Android”

          Google’s business is the web and the cloud and having a good presence in mobile is essential for their future. Their R&D investments are already lucrative according to them, and strategically positions themselves as leaders in mobile software and technologies. Brilliantly executed so far.

          Mentioning of “Asymco” as credible source shows who you are. “Asymco” don’t know Google’s business better than Google. They just write things to make Apple fanboys happy. Wake up.

        • BioNerd

          “they’ve actually lost billions and billions of dollars on Android”

          Google’s business is the web and the cloud and having a good presence in mobile is essential for their future. Their R&D investments are already lucrative according to them, and strategically positions themselves as leaders in mobile software and technologies. Brilliantly executed so far.

          Mentioning of “Asymco” as credible source shows who you are. “Asymco” don’t know Google’s business better than Google. They just write things to make Apple fanboys happy. Wake up.

          • FalKirk

            The facts that I sourced came from Google statements or from fact revealed at the recent Oracle v. Google trial. Google made about 3.5 billion dollars from ALL of mobile last year. Two-thirds of that came from iOS. That leaves about 1.5 billion made from all of Android. That is the gross number. It does not deduct the costs of R&D or the cost of acquiring Motorola.

            Please stop substituting insults for facts. If you have something meaningful to contribute then please do so. Dismissing facts just because you don’t like them is not helpful.

          • BioNerd

            We will have to see how these projects benefit Google in the long run.

            Kodak was once a very profitable company, but they did not prepare themselves for the future. Google’s investments position themselves to not be obfuscated by new technology trends, or boycotted by rivals.

            It is not hard to see that Google’s bet on Android way back in 2005 (and also maps, navigation, voice recognition, etc) was a strategic move to avoid becoming hostage of rivals in the mobile world.

            And they are already profiting from those investments. They became a major player in an important tech market. Everything is increasingly improving.

          • BioNerd

            We will have to see how these projects benefit Google in the long run.

            Kodak was once a very profitable company, but they did not prepare themselves for the future. Google’s investments position themselves to not be obfuscated by new technology trends, or boycotted by rivals.

            It is not hard to see that Google’s bet on Android way back in 2005 (and also maps, navigation, voice recognition, etc) was a strategic move to avoid becoming hostage of rivals in the mobile world.

            And they are already profiting from those investments. They became a major player in an important tech market. Everything is increasingly improving.

          • FalKirk

            The facts that I sourced came from Google statements or from fact revealed at the recent Oracle v. Google trial. Google made about 3.5 billion dollars from ALL of mobile last year. Two-thirds of that came from iOS. That leaves about 1.5 billion made from all of Android. That is the gross number. It does not deduct the costs of R&D or the cost of acquiring Motorola.

            Please stop substituting insults for facts. If you have something meaningful to contribute then please do so. Dismissing facts just because you don’t like them is not helpful.

    • BioNerd

      “First, their initial tablet OS is late, it is a separate entity from their phone OS and is unfinished because it is rushed to market.”

      What? Ice Cream Sandwich is used on both phones and tablets. It had highly positive reviews everywhere. It looks super modern, polished and sleek. You have no idea about what you are talking. Probably never tried it. 🙂

      • FalKirk

        “Ice Cream Sandwich is used on both phones and tablets.”-BioNerd

        As I said in my post, I was referring to Google’s initial tablet OS, Honeycomb.

      • FalKirk

        “Ice Cream Sandwich is used on both phones and tablets.”-BioNerd

        As I said in my post, I was referring to Google’s initial tablet OS, Honeycomb.

    • BioNerd

      “First, their initial tablet OS is late, it is a separate entity from their phone OS and is unfinished because it is rushed to market.”

      What? Ice Cream Sandwich is used on both phones and tablets. It had highly positive reviews everywhere. It looks super modern, polished and sleek. You have no idea about what you are talking. Probably never tried it. 🙂

    • midhubalan

      I think Android is Bing’s counterpart in Google, A sink hole for dollars. Only difference being that there are people who actually think Android is a winner.

  • robroberts2009

    Does anybody really want or need a crappy android low end $179 google tablet? That market has already proven to be a disaster — i guess Google wants to chase this model all the way to the bottom. Bottom feeders, i.e. people who don’t pay for anything, will love these devices.

    • Floridaphil941

      Why would you think it’s low end? I mean, have you even read the specs of the memo 370T? It slams any other tablet on the market right now.

      I could turn your argument on it’s head and say that people with too much money will gravitate to iPads. If Android can gain critical mass, through lower cost tablets, then there will be no reason to spend nearly 3 times as much for an Apple product.

      • FalKirk

        “Why would you think it’s low end?”-Floridaphil941

        If it’s going to sell for $200, it’s going to be low end.

        “I could turn your argument on it’s head and say that people with too much money will gravitate to iPads.”-Floridaphil941

        You could do that if you wanted to delude yourself. When the iPad first appeared, its $499 base price sucked all the air out of the tablet market. Even now, two years later, competitors are struggling and struggling mightily to undercut the price of Apple’s 10 inch offering.

        Further, Apple is selling iPads as fast as they can make them. (See Tim Cook’s remarks from Apple’s earnings call.) And this is all happening during one of the worst recessions in modern history. Only a fool would suggest that iPads are only being sold to “people with too much money”.

        • BioNerd

          ASUS is famous for building affordable but decent machines. I don’t think Google will damage the Android and Google brands releasing a crap tablet. They will make a decent one for the price that most people are willing to pay. As successful as the iPad is, most people think that $500 is too much to ask for a tablet (me included).

        • BioNerd

          ASUS is famous for building affordable but decent machines. I don’t think Google will damage the Android and Google brands releasing a crap tablet. They will make a decent one for the price that most people are willing to pay. As successful as the iPad is, most people think that $500 is too much to ask for a tablet (me included).

          • FalKirk

            “I don’t think Google will damage the Android and Google brands releasing a crap tablet.”-BioNerd

            I never said or suggested that they would.

          • FalKirk

            “I don’t think Google will damage the Android and Google brands releasing a crap tablet.”-BioNerd

            I never said or suggested that they would.

    • BioNerd

      I want a $179 ASUS tablet with Ice Cream Sandwich. Super sleek + super smooth + super cheap? I’m all for it.

    • BioNerd

      I want a $179 ASUS tablet with Ice Cream Sandwich. Super sleek + super smooth + super cheap? I’m all for it.

      • FalKirk

        How does anyone profit from such a device?

      • FalKirk

        How does anyone profit from such a device?

        • BioNerd

          Ask ASUS? Their latest earnings growth were in part attributed to “better than expected notebook and tablet sales”.

        • BioNerd

          Ask ASUS? Their latest earnings growth were in part attributed to “better than expected notebook and tablet sales”.

          • FalKirk

            How does anyone profit form a device that is projected to be sold below cost?

          • benbajarin

            Hey, can you email me? I have a few questions I’d like your feedback on. My email is in my bio box.

          • FalKirk

            Of course. At your service.

          • FalKirk

            Of course. At your service.

          • benbajarin

            Hey, can you email me? I have a few questions I’d like your feedback on. My email is in my bio box.

          • FalKirk

            How does anyone profit form a device that is projected to be sold below cost?

  • quietstorms

    I’m not sure how Google is competing with the iPad here. Apple is making their tablet into future of computing. A 7″ tablet is less than half the size of the iPad. They are certainly competing with Amazon but I wonder if they can. Amazon has the superior content offering to Google and the Nexus line of phones hasn’t been particularly successful even with the Google branding.

  • Rich

    Tim, I’ve read your post but I’m not sure what Google’s own tablet is going to do for Google. Take control of Android? It won’t stop the forking of Android. Anger their their partners? I’m pretty sure it will. Add revenue gained through purchases via their tablet? Sounds like a risky bet to me. Google has tried a number of projects that failed and I’m thinking this could well be another one.

  • Ryan

    Android hasn’t done well in the tablet space because the carriers can’t push sub par tablets on people the way they do with phones. Let’s be honest, Android wouldn’t be a thing at all if not for the wireless carriers.

    This is the real reason people don’t choose Android tablets, they never really chose phones either, but the carriers shoved them down the throats of the casual consumer.

  • Ryan

    Android hasn’t done well in the tablet space because the carriers can’t push sub par tablets on people the way they do with phones. Let’s be honest, Android wouldn’t be a thing at all if not for the wireless carriers.

    This is the real reason people don’t choose Android tablets, they never really chose phones either, but the carriers shoved them down the throats of the casual consumer.

  • Mark Manes

    Google will only fail when they make their own tablet. Oh it will be a nice device but it will be a product that only the geeks knows about. If they were to get into retail distribution then they face extreme anger from Samsung and Amazon. Frankly Amazon should grab WebOS and go on their own path.

    Truly Google should do one or two things:
    – Get rid of the notion of Open source and piss off the geeks and make Android a closed licensable product that in order to license you must have these hardware characteristics .. period.
    OR

    – Turn Chrome OS into what they intend for tablets and let Android go down the path it is now going, and again license Chrome OS with tight specifications and requirements for license.

    Samsung wants to build phones and not be in the OS business. They need an OS to license–why not let them pay for it?

    I know this company called Microsoft who does quite well licensing software to third parties. To me it is a stretch to think of Google as a software company as their business is the advertising business. It is beyond all belief to consider them a hardware company. If they want to be in the software business-then do it the old fashioned way–license it to the third parties and make their money that way. Do not compete with those who are in the hardware business.

    One final point–it is hard to make anything that competes with the iPad as it has the momentum. It has the apps and the eco system. The only people I think who have a chance here is Amazon as they are focused on the eco system as well. Google has no focus. They do a little of this and a little of that–and only a few things they do well.

  • Mark Manes

    Google will only fail when they make their own tablet. Oh it will be a nice device but it will be a product that only the geeks knows about. If they were to get into retail distribution then they face extreme anger from Samsung and Amazon. Frankly Amazon should grab WebOS and go on their own path.

    Truly Google should do one or two things:
    – Get rid of the notion of Open source and piss off the geeks and make Android a closed licensable product that in order to license you must have these hardware characteristics .. period.
    OR

    – Turn Chrome OS into what they intend for tablets and let Android go down the path it is now going, and again license Chrome OS with tight specifications and requirements for license.

    Samsung wants to build phones and not be in the OS business. They need an OS to license–why not let them pay for it?

    I know this company called Microsoft who does quite well licensing software to third parties. To me it is a stretch to think of Google as a software company as their business is the advertising business. It is beyond all belief to consider them a hardware company. If they want to be in the software business-then do it the old fashioned way–license it to the third parties and make their money that way. Do not compete with those who are in the hardware business.

    One final point–it is hard to make anything that competes with the iPad as it has the momentum. It has the apps and the eco system. The only people I think who have a chance here is Amazon as they are focused on the eco system as well. Google has no focus. They do a little of this and a little of that–and only a few things they do well.

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