Google is rumored to be working on its own Nexus tablets, to target the budget segment and capture more share of the tablet market, since it clearly hasn’t been able to do very well in competing with the iPad in the premium segment.
Speculation suggests that it may sell not only its own Nexus tablets, but also other co-branded tablets directly to consumers through its store.
With its Motorola acquisition, Google now has the capabilities to manufacture its own hardware, besides working with hardware partners.
Google has tried the direct online sales model before in the smartphone market, with the Nexus One, but it didn’t do very well in the U.S., where most smartphone sales are driven by carriers. However, the tablet market is quite different, with sales driven by retailers.
Like smartphones, Google doesn’t intend to make money directly from tablet sales, but by mobile advertising on tablet devices. Having an online store will allow it to lower costs, and offer its tablets for even lower.
Unlike the smartphone market, which is currently dominated by Android, Google has failed to capture much market share in the tablet space, which is still ruled by the Apple iPad.
With Windows 8 still months away from launch, Google has a good window of opportunity to capture a majority market share at least in the budget segment