Google goes up against Amazon, Apple with Nexus tablet

SAN FRANCISCO Thu Jun 28, 2012 5:25am IST

1 of 4. An attendee uses a Google Nexus 7 tablet during Google I/O 2012 Conference at Moscone Center in San Francisco, California June 27, 2012.

Credit: Reuters/Stephen Lam

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SAN FRANCISCO (Reuters) - Google Inc (GOOG.O) will sell its first tablet from mid-July for $199, hoping to replicate its smartphone success in a hotly contested market now dominated by Amazon.com Inc's (AMZN.O) Kindle Fire and Apple Inc's (AAPL.O) iPad.

By taking a greater role in the tablet market, Google hopes to ensure that its various online services remain front-and-center to consumers amid a changing technology landscape in which tablets by Apple and Amazon are increasingly becoming gateways to the Web and Web-based content such as movies and music.

Google's maiden entry in the tablet market, which will also see the advent of Microsoft Corp's (MSFT.O) Surface this year, could also help accelerate development of tablet-specific applications for its Android operating software -- a key factor that has helped popularize Apple's iPad, analysts say.

The "Nexus 7" tablet, built by and co-branded with Taiwan's Asus (2357.TW), was one of several gadgets unveiled at its annual developers' conference on Wednesday, as the Internet search and advertising leader dips its toe into the intensively competitive consumer arena.

The announcement of the new tablet comes a month after Google acquired its own hardware-making capabilities with the $12.5 billion acquisition of smartphone maker Motorola Mobility. But Motorola, which Google has said it will run as a separate business, was absent from most the new products and services showcased at the event.

Google co-founder Sergey Brin demonstrated Google Glass, a futuristic-looking eye-glass-computer that can live-stream events, record, and perform computing tasks. The device will be available to U.S.-based developers early next year for $1,500.

And it unveiled the Nexus Q - a $300 device with a built-in amplifier that lets users stream content from Android devices onto their TVs.

But the Nexus tablet hogged the spotlight. Sold initially only on the Google Play online store, its $199 price tag and 7-inch stature is aimed squarely at the Fire, but the Nexus has a front-facing camera while Amazon's tablet does not.

Analysts consider the Fire a window into Amazon.com's trove of online content rather than an iPad rival, given the $499 that Apple asks for a device with a "retina" display that far outstrips it in terms of resolution.

Google can similarly use the Nexus 7 to connect to its own online offerings, which include YouTube and Google Play, the name of its online store where it sells digital music, movies and games. It will go after more cost-conscious users who might shun the pricier iPad.

"Nexus 7 is an ideal device for reading books. The form factor and weight are just right," said Chris Yerga, Google director of engineering for Android.

Google said it will offer buyers of the Nexus 7 a $25 credit to spend at the Google Play store and it showed off several media-centric capabilities, such as a new magazine reading app.

"They all but called it a Kindle Fire killer. They're clearly gunning for that No. 2 spot behind Apple's iPad that is currently occupied by Kindle," said Altimeter Group analyst Chris Silva. "But the con is they do not yet have a footprint in people's minds and wallets as the go-to place to purchase and consume media."

JELLY BEANS

Google has partnered with smartphone makers to develop Nexus-banded smartphones for several years, providing a showcase product that delivers Google's ideal vision for a device based on its Android software.

Extending the Nexus concept to tablets should similarly establish a model that other hardware makers can emulate, resulting in a more a competitive and uniform line of Android tablets to market, say analysts.

Shares in Google gained 0.8 percent to $569.37 in afternoon trade.

The Nexus will feature the new 4.1 "Jelly Bean" version of Google's software, as well as a front-facing camera, a 1280x800 resolution screen, and an Nvidia (NVDA.O) Tegra 3 processor.

Google's free Android software is the No. 1 operating system for smartphones, with about 1 million Android devices getting activated every day

But it has struggled to compete with Apple's iPad in the market for tablets, largely because it lags far behind Apple and Amazon in terms of available content and tablet-specific applications, such as games.

Meanwhile, Apple has increasingly moved to reduce its dependency on Google services on its devices. Earlier this month it unveiled its own mapping software, which will replace Google maps as the default mapping service in the next version of its mobile operating system.

And Amazon's Kindle Fire, while based on Google's open-source Android software, features a customized interface that does not use many Google services.

Executives showcased the new 4.1 "Jelly Bean" version of Android operating system on Wednesday. The new software delivers faster performance, according to the company, and new features such as "voice search."

"That range of services will be the secret to stitching together this rag-tag fleet of Android gadgets into a platform that can compete with Apple for minutes of users' attention rather than premium device dollars," said Forrester analyst James McQuivey.

The tablet's limited availability - executives said they had no plans yet to expand distribution beyond Google's own site - may curtail initial sales growth.

Google briefly sold a specially designed Android smartphone - the Nexus One - directly to consumers in 2010, but closed the online store after four months saying it had not lived up to expectations.

But it's the lack of "native" applications - software designed with a larger tablet in mind, rather than ported from smartphones - that is the Nexus' biggest impediment for now.

"Unless you have a strong app offering, for a consumer it is a piece of glass that does what a phone does on a larger screen," Carolina Milanesi, analyst at Gartner Research.

(Editing by Tim Dobbyn, Gary Hill, David Gregorio and Andre Grenon)

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