Just wanted to point out that this post was finished on Friday night and sure enough, news broke this morning that Eric Schmidt expects there to be a Nexus tablet in 2012.
HP is currently the number two seller of tablets, though most expect Amazon to usurp them in that position (we’ll never know for sure because Amazon doesn’t release sales numbers). HP didn’t become number two (or even number one plus) because people went out in droves to buy the TouchPad for $499 or even $399. HP became number two because they sold the TouchPad for $99 and $149. Amazon is going to do the exact same thing at a $200 price point.
Over the past few weeks there have been several articles that argued that Amazon’s Kindle Fire is aiming to take out Android tablets, not the iPad. Amazon is obviously trying to beef up their market share by attracting people with a cheap tablet – they made a $200 tablet in every sense of the phrase. Amazon’s goal was never to take on the iPad. To try and take out the iPad would take a tremendous effort and a premium product. Amazon’s goal was to sell a lot of cheap tablets with minimal effort, which they did. The whole point of a product that you sell at a loss is either to get rid of inventory or to make up sales through services purchased; Amazon is doing the latter. While Amazon’s efforts certainly won’t disrupt Apple’s plans, they could hurt Google.
Apple sells a premium product, not a bargain product. Google is trying to do the same thing, but so far tablets like the Samsung Galaxy Tab and the Motorola Xoom haven’t fared as well in sales (Motorola and Samsung make up less than 3% of the market by Gruber’s estimates). It’s possible that products like the ASUS Transformer Prime will gain some traction, but it remains to be seen if any Android tablet can gain significant market share. Even combined, Android tablets are insignificant in market share compared to the iPad.
I’m convinced that Google needs to do three things to gain market share in the tablet space: make a halo product, advertise it, and sell it for cheaper than the iPad.