Report: Google to sell its own co-branded tablets to consumers

Google (NASDAQ:GOOG) is going to sell co-branded Android tablets directly to consumers later this year via an online store, according to a report in the Wall Street Journal, in a bid to compete more directly in the tablet market with Apple (NASDAQ:AAPL) and Amazon. The move is also part of a strategy to spur sales of Android tablets, which have trailed the iPad by a wide margin.

According to the report, which cited unnamed sources familiar with the matter, Google will sell tablets through the online store from multiple manufacturers, and AsusTek and Samsung could be partners. Indeed, the report said that a tablet from Asus may be released later this year, though it's unclear when the store would open.

Google and Asus declined to comment, according to the Journal. The project was first rumored by DigiTimes and was also confirmed by the New York Times, which cited a Google employee briefed on the project.

In a sense, the project would be a continuation of the strategy Google employed to sell its Nexus One smartphone. The HTC-made, Google-branded device went on sale online from Google in January 2010 and was intended to be a showcase of the latest Android software at the time, 2.1, or Eclair. However, Google, HTC and T-Mobile USA, the carrier Google partnered with for the device, faced criticism from customers who were unsatisfied with the level of customer service they received, and unsure of which company to approach for customer service. Google shuttered the Nexus One online store after five months.

Andy Rubin, Google's senior vice president in charge of mobile, said at the Mobile World Congress trade show in February that Google intends to "double down" on Android tablets in 2012 in an effort to catch up with Apple. Rubin said the 12 million Android tablets sold to date are "not insignificant, but less than I'd expect it to be if you really want to win," and said that "2012 is going to be the year that we double down and make sure we're winning in that space."

Apple sold 15.43 million iPads in the fourth quarter and 40.5 million iPads in 2011. Apple announced it sold three million units of its third-generation iPad in the device's first weekend of availability.

Analysts were skeptical of Google's reported online tablet store, and noted that Android tablets in general have not yet matched up to the iPad. "Nobody has come close to matching what Apple has delivered with the iPad," Gartner analyst Michael Gartenberg told the Journal.

"My initial reaction to that is that there is very little about this that inspires confidence based on what we know," CCS Insight analyst John Jackson told FierceWireless. "There's nothing about this that says it's an obvious recipe for success."

Google's tablet store would be an attempt to not only compete with the iPad but also with Amazon's $199 Kindle Fire, which Amazon sells directly to consumers. Jackson said that partnering with Asus, known for low-cost devices, could be a way for Google to attack that end of the market. However, he said that there are already numerous low-cost Android devices in the market. He said these low-cost tablets are an attempt to undercut Apple on tablet pricing, but that the gadgets are often lacking in features.

A recent report from Forrester Research said that none of Apple's Android tablet competitors can claim more than 5 percent of the overall tablet market. According to the report, Apple still controls 73 percent of the tablet market, and other OEMs are struggling to catch up through improvements in services. Forrester found that Samsung has a 5 percent market share, Motorola Mobility (NYSE:MMI) has 4 percent and Acer a 3 percent share.

For more:
- see this WSJ article (sub. req.)
- see this WSJ blog post (sub. req.)
- see this NYT blog post

Related Articles:
Apple sells 3M new iPads in first weekend of availability
Report: Apple's tablet competitors can't crack 5% market share
Google's Rubin: We're building a 'firewall' between Android and Motorola
Motorola exec: Product strategy won't change after Google acquisition

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