So far June is showing itself to be a news-filled month for tablet announcements. Microsoft announced it is entering the hardware space once again with the Microsoft Surface tablets. Available in both ARM and x86 architectures, the devices will bridge the gap between tablets and ultrabooks and unify the Windows experience across all mobile devices. Today Google announced the Nexus 7 as well as the Nexus Q and some updates to Google Play. Add to these rumblings in the blogosphere about Amazon’s next Kindle Fire and we have the making of an action packed, exciting summer tablet season!

Google is partnering with Asus for its first Nexus Tablet, the Nexus 7 (pictured below). The Nexus smartphones have typically been high-end, best of breed devices aimed at competing with the iPhone while showing off an unaltered Android OS.  For full disclosure, I own the Galaxy Nexus and am thrilled with most aspects of the device so there does exist potential for a slight personal bias. But for the tablet, Google addressed the low tier with a $199 7” device. Google is clearly subsidizing a good chunk of the costs as Amazon did with the Fire with expectations to make the money back in content.

Despite its lower price it still has fairly impressive specs including 1280x800 resolution, Tegra 3 chipset, HDMI out, and weighs just 340 grams. It will also be running Android 4.1, referred to as “Jelly Bean.” Most importantly, battery life is on par with competitors at 9 hours. The Nexus Q, an Android computer for the home, was also introduced and looks to be a huge step for Google in entering the living room, growing the importance of its cloud solutions, and a better way to get onto the TV than its previous attempt with Logitech.

It appears as though Google is not replicating its Nexus smartphone strategy with the Nexus 7. Instead of focusing on the premium 10" market segment, it is going for the lower end 7” market segment. This is due to two factors: 1. Competing with Apple in the 10” segment has shown to be difficult at best. 2. The lower-end 7” segment offers a much larger opportunity for growth regardless of whether or not Apple comes out with a smaller 7” device as the 7" iPad will likely retail for a considerable amount more than the Nexus 7.  Furthermore, we see the low end of the market growing significantly more than the premium tier.  (For further information, please see our Forecast by ASP due out later this week).  There are only a handful of 7” devices with any significant traction and the Kindle Fire, one of the most popular devices in this segment, is only currently available in the US, greatly limiting its addressable market. The Nexus 7 will have much broader availability, giving Google a strong advantage in terms of global market share and therefor greater economies of scale. They also have economies of scope with their roots in the OS as well as experience in the smartphone market.

Google Play has also been updated with Magazines, Movies, and TV shows. The amount of media available on Google Play is tremendous and I believe Google needs to make a strong advertising campaign in order to get this across to consumers to overcome some of the stumbling blocks it had earlier along with the confusing recent name change.

Amazon is also rumored to have an upcoming announcement for the latest iteration of the Kindle tablet. There are many who believe this will be the previously talked about “Hollywood” tablet, a 10” device that will most likely be similar build quality to the Kindle Fire. It would likely need to retail at a significant discount to the iPad’s $499 intro price point in order to gain any traction. The other is possibility is that Amazon decides to upgrade its current form factor with improved specs and build quality and remain focused on the $200 price point. I believe this would be the better move for Amazon as it will have more success competing against Google at a similar price point than Apple at even a $100 discount.

Amazon continues to have a strong library of content but Google is quickly building its arsenal of eBooks as well as music, movies, and TV shows. For now, Amazon may continue to have an edge in content, if not in actual numbers, at least in consumer awareness. Google will most likely have an advantage in terms of hardware specs and build quality. Both companies offer a cloud storage service that will play a stronger role as the market develops, however, Google’s position is stronger as it operates across all devices, enabling a more consistent and unified experience from smartphone to tablet to desktop, a position that is furthered by the introduction of the Nexus Q.

So how will this play out? Amazon displayed an impressive level of sales in its first quarter in the tablet market but the enthusiasm for the device seems to have lost its flame. When Google partners with OEMs to manufacture its Nexus devices, they have historically been top quality and relatively successful devices. However, this time Google is changing its strategy a bit and clearly going for more quantity and market share. How well Google does depends not only on how well they continue to build out their ecosystem of eBooks and multimedia but also how well they market it. To date it has not been marketed well and the usability of the store falls quite a bit short of iTunes or even Amazon. I believe Google will have an advantage due to their hardware but only time will tell if they can gain traction with Google Play.

See Related Tablet Reports:

See Related Content Reports: