The possibility of a Google-made Nexus tablet has been a major source of speculation over the past year. Recent rumors suggest the company is making a seven-inch device that will be priced to compete with Amazon's Kindle Fire. Such a product could possibly be revealed at Google's upcoming I/O conference and might even run Android 5, which is rumored for a Q2 launch.
A new report published today by the Wall Street Journal, which cites unnamed sources close to the matter, confirmed that Google is developing its own Android tablets. The article claims Google will sell the devices online through its own store and is considering the possibility of subsidizing the price in order to beat the Kindle Fire. Google's first tablet will reportedly be manufactured by Asus.
Google first experimented with being a device retailer when the original Nexus One launched in 2010. The experiment ended badly for Google due to limited demand and the difficulty of handling customer support. Although Google has continued to produce its own Nexus devices, the company has transitioned to selling them through various retail partners, including mobile carriers and Best Buy. Nexus devices are no longer directly available to regular consumers through Google's website.
It's possible the direct retail model will work out better for Google with tablets than it did for smartphones. Tablets aren't as closely tied to data plans, which means that they are potentially more conducive to the stand-alone retail model.
Amazon's Kindle Fire uses a proprietary fork of the Android operating system and comes with Amazon's own storefront instead of Google Play. The Fire is currently selling better than more conventional Android tablets. The emergence of this parallel Android ecosystem, and its growing popularity, threaten Google's dominance over Android. The low price and tight integration with Amazon's content library have contributed to the Fire's relative success.
Amazon can afford to sell tablets at a lower cost than many of its rivals because the company is banking on content and application sales to make up the difference. Google has been working to build up its own content library and could be positioning itself to pursue the same approach. Google has recently taken steps to streamline its various content distribution channels into a more unified service.
