Does Google Hate Amazon's Kindle Fire More Than Apple Does?

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On the surface, you would think that Amazon.com's (NAS: AMZN) announcement that it was selling "millions" of Kindles, with the Kindle Fire being the most successful, would be nothing but good news for Google (NAS: GOOG) Android in the mobile wars.

A report from always-take-with-a-grain-of-salt Digitimes now claims that Google is "targeting" the Kindle Fire with a tablet of its own. It attributes upstream supply-chain sources to the idea that Google hates the Kindle Fire even more than Apple (NAS: AAPL) does, even as the Kindle Fire may have stolen 1 million to 2 million iPad sales over the holidays.

Recipe for a bogus report
The publication says Big G will launch a branded tablet in March or April, sporting a 7-inch display and running Android 4.0 Ice Cream Sandwich. The biggest shocker is that it supposedly will undercut the Kindle Fire's already bargain $199 price point.

Toss in the hints that Google Chairman Eric Schmidt dropped recently that "in the next six months," Google will be marketing a "tablet of the highest quality," which would presumably carry its flagship Nexus branding, add in nine pinches of healthy skepticism, and what do you get?

A bogus report.

A spotty reputation to maintain
First and foremost, you should always be mindful that rumors are just that: rumors. A disproportionately high number of rumblings from the endless tech rumor mill find their roots from Digitimes' Taiwanese headquarters. Its proximity to the Asian component supply chain is probably why it's always garnered moderate levels of credibility over the years, but its recent track record has been lousy.

MacRumors pegs the publication's accuracy rate in the ballpark of 55%, which doesn't even seem all that bad for an entity known for being hit or miss. Anytime you run into a Digitimes rumor, it wouldn't be misplaced to flip a coin on whether you should believe it, but there have been an awful lot of misses lately.

Some of their reports check out, like the one detailing how the iPad 3 will feature a Retina Display using indium gallium zinc oxide (IGZO) panels from Sharp. Others simply fall flat, like its prediction that Apple would unveil the new iPad at the MacWorld|iWorld conference at the end of this month that Apple hasn't officially attended since 2009 because the company now focuses less on trade shows. Cupertino now hosts its own events for product launches that have become media frenzies in their own right.

That being said, let's proceed with tearing down this bogus report.

A tablet oxymoron
It's not economically feasible to market a "tablet of the highest quality" for less than $199. By virtue of the Nexus brand, a Google flagship Nexus Tablet would definitively set the standard for what an Android tablet should be. Just like the Nexus smartphone lineup, it would be a benchmark for other Android OEMs to use as a starting point.

If there's one thing the Kindle Fire isn't, it's a tablet of the highest quality. That's not to say it's a bad tablet, but anyone with one sitting in his or her Amazon.com Shopping Cart preparing to click "Proceed to Checkout" should already have tempered expectations as to what kind of gadget $199 will buy, especially without the subsidies that wireless carriers hand out for smartphones.

Amazon has made a lot of concessions to get the device's cost down to the reported $201.70, such as ditching any type of camera.

"If Larry and Eric both jumped off a cliff, would you jump, too?"
Pricing a Nexus tablet below $199 would also be a pretty harsh blow to every singleone of Google's Android OEM partners that have tablet aspirations. It would effectively price them out of the market in a move that should be considered opening the door and showing them the way. As unrealistic as it is for Google to come out with a quality tablet for under $199, try multiplying that feeling by 10 and seeing how quickly your friends become your enemies.

Android tablets have been putting up underwhelming figures thus far, with Hewlett-Packard's (NYS: HPQ) zombie machine even taking the silver medal in tablet sales for most of 2011, thanks to its $99 clearance sale. With HP likely to be gearing up for another push, Google needs to lead the way in 2012 to unlock Android's tablet potential, and pricing its partners out is hardly what I'd call leadership.

Larry Page is now coming up on his one-year anniversary as CEO, but he's not shortsighted enough to pull a move like this, and neither is Eric Schmidt.

Nexus to the rescue!
Android tablets are in shambles and in dire need of a rescue. The Kindle Fire is the only one doing well, and it's off doing its own thing after Amazon hijacked what it needed and pointed the tablet to its own content offerings, snubbing its brethren in the process.

Google needs a Nexus tablet to rally its forces. I have no doubts that Google is working on a high-quality Nexus Tablet, probably with proposed subsidiary Motorola Mobility (NYS: MMI) , but it will sure cost more than $199.

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At the time this article was published Fool contributorEvan Niuowns shares of Apple and Amazon.com, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Apple, Google, and Amazon.com.Motley Fool newsletter serviceshave recommended buying shares of Google, Apple, and Amazon.com and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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