Google eyes direct sales of Android tablets

Search giant Google is planning to directly sell tablet computers through an online store in a bid to take some market share from Apple Inc., whose iPad is the present runaway leader in the market.

 

A report on The Wall Street Journal cited people familiar with the matter who said Google plans to sell co-branded tablets directly to consumers via its online store, like Apple and even Amazon.com.

 

"By selling tablets directly to consumers, Google is upping the ante against Apple, which debuted its market-leading iPad two years ago. Android-based tablets made by Samsung and others have been slow sellers by comparison," it said.

 

But other details of the project remain unclear, such as when the online store will be unveiled.

 

Also, Google is expected to release the next version of its Android OS codenamed "Jelly Bean" sometime this year.

 

WSJ noted research firm Gartner had estimated last fall taht Apple would capture 73 percent of the tablet market and Android only 17 percent.

 

It said Google's move appears to be an effort to turn around sluggish sales of tablet computers powered by its Android operating system.

 

On the other hand, WSJ noted Google had tried to directly sell branded Android smartphones in 2010 when it offered the Nexus One made by Taiwan-based HTC Corp.

 

The effort was scrapped several months later, amid better sales of other Android-powered smartphones.

 

Google was also considering subsidizing the cost of future tablets to boost the prospects of its new online tablet store and to compete on pricing with Amazon's Kindle Fire, said one person with knowledge of the effort.

 

The search giant also faces competition from Amazon.com, which in 2011 jumped into tablets with its $199 Kindle Fire, which gained popularity due to its low price.

 

Co-branding

 

Like the Nexus One, some future Android tablets are expected to be co-branded with Google's name, WSJ quoted people familiar with the matter as saying.

 

They added Google is expected to sell devices from different manufacturers, though Google will not make the hardware, leaving that part to partners like Samsung Electronics Co. and AsusTeK Computer Inc.

 

While some wireless industry executives said Google's Nexus One smartphone effort was a failure, Google Android chief Andy Rubin said previously that the company sold more than 100,000 of these phones in three months and "broke even" on its investment.

 

Rubin added Google stopped the effort because other new Android-powered phones were on par with or better than the Nexus One.

 

He said Google also could not figure out how to sell the Nexus One online on a global scale, and its resources would be wasted in trying to line up wireless carriers in foreign countries to sell plans for the phone.

 

Asus co-branded tablet?

 

WSJ quoted one of those familiar with the matter as saying one co-branded tablet that may be sold in the online store one from Taiwan-based Asus.

 

But WSJ said spokespersons from Google and Asus have declined to comment.

 

Motorola mobility purchase

 

Google is also expected to manufacture its own tablets, due to its pending $12.5-billion purchase of Motorola Mobility Holdings Inc.

 

People familiar with the Google's plans said Motorola tablets are expected to be offered in the online store.

 

Motorola's Xoom was the first tablet running Android software optimized for tablets. It went on sale in February 2011, nearly 11 months after the first iPad arrived. — TJD, GMA News

 

But Motorola has said it sold about one million Xoom tablets in 2011, below its expectations.

 

Several other Android-powered tablets, including two versions of Dell Inc.'s Streak tablets, have been discontinued.

 

Other manufacturers have noted the disappointing results.

 

"Honestly, we're not doing very well in the tablet market," Hankil Yoon, a product strategy executive for Samsung, said at the Mobile World Congress conference earlier this year.

 

Android adoption

 

Google is seeking to increase adoption of its Android software so its search, maps and other services, which are responsible for the bulk of its mobile revenue through ads sales, are entrenched in the mobile-device world.

 

"While that revenue is small compared to PC-based ad sales, it's a fast-growing category for Google, and tablets can command better ad prices than smartphones," WSJ said.

 

It also noted Google Chief Executive Larry Page had said last fall the company was on pace to generate more than $2.5 billion in revenue from mobile devices, largely through selling online ads on smartphones.

 

Wireless carrier teamups

 

The WSJ report said Google may not have to worry about pairing with wireless carriers because tablets are primarily used with WiFi connections in people's homes.

 

Marketing support

 

Google will back its online tablet store with a huge marketing support, said people familiar with the effort.

 

Since the Nexus One experiment, Google has honed its mass-marketing skills, spending heavily on TV ads and other marketing to promote services other than its Web-search engine.

 

Physical stores

 

However, physical stores will still remain an important sales channel for Google.

 

Some U.S. retailers are anxious for an Apple rival to emerge in the market, said people familiar with the matter.

 

"Some retailers that sell iPads have chafed under Apple's rules that require stores to promote its products more prominently, these people said, and the retailers generate less revenue per sale of Apple products versus other electronic devices," WSJ said.

 

Google has taken other steps to be a consumer electronics brand, directly overseeing the manufacturing of a Google-branded music and video streaming device.

 

People familiar with the matter were quoted in the WSJ report as saying the device is to be used in people's homes, and may go on sale later this year. — TJD, GMA News