This Might Be Google's Worst Idea Yet
If the rumors are to be believed -- and let's face it, when DigiTimes is involved, as it is here, they frequently shouldn't be -- Google (NAS: GOOG) has cut a deal with ASUS to create a $199 tablet to compete with not just the iPad but also Amazon.com's (NAS: AMZN) fast-selling Kindle Fire.
Fools might remember ASUS for an ambitious Frankentech project called the PadFone. The device that's a phone and a tablet that becomes a notebook PC uses the Ice Cream Sandwich edition of Google's Android operating system, among other advanced features.
More importantly, the tablet that doubles as a notebook screen is 10.1 inches -- or roughly the size of the screen that made the iPad attractive. By contrast, DigiTimes reports that an in-development cheapskate tab would include just 7 inches of screen space. From the article:
Google, in order to compete with Amazon, will cooperate with Asustek Computer to launch a 7-inch inexpensive tablet PC in May-June 2012 and this is expected to bring pressure of price cuts upon other vendors, including Acer, Lenovo, and Samsung Electronics, and in turn diminish gross margins for Taiwan-based supply chain makers, according to industry sources.
Please say it isn't so, Google. Consumers haven't taken to 7-inch tablets in the same way as larger alternatives. Don't take my word for it. Ask Dell (NAS: DELL) and Research In Motion (NAS: RIMM) about their experiences. Dell's Streak tab has twice failed to capture anyone's imagination, while RIM's shrimpy PlayBook took far too long to embed email and flopped as a result.
By contrast, Apple (NAS: AAPL) sold more than 15 million 10-inch iPad 2 models in the fourth quarter and 3 million more units of its latest tablet during its first weekend on sale. My point? The 7-inch Fire is the exception rather than the rule. Why base an entire product and pricing strategy on an outlier, especially when Amazon, like Apple, has the benefit of bundling simple, cost-effective content access with its tablet?
You're better than this, Google. If you really want a seat at the tab table, work with your new hardware team to create a 10-inch tablet that embeds the new "Play" digital store in a friendly and intuitive way. Anything less would make for wasted capital.
Think I'm wrong? Go ahead and tell me so using the comments box underneath. Or if you'd rather spend more time investigating the rise of mobile computing, download this new Motley Fool special report: "The Next Trillion Dollar Revolution." The research is free, but only for a limited time. Get your copy now.
At the time this article was published Fool contributorTim Beyersis a member of theMotley Fool Rule Breakersstock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim'sWeb home,portfolio holdings, andFoolish writings, or connect with him onGoogle+or Twitter, where he goes by@milehighfool. You can also get his insightsdelivered directly to your RSS reader.The Motley Fool owns shares of Apple, Google, and Amazon.com.Motley Fool newsletter serviceshave recommended buying shares of Google, Amazon.com, and Apple, writing covered calls on Dell, and creating a bull call spread position in Apple. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.