Why Google is Creating Their Own Tablet

on May 29, 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.