While the Nexus One really didn't succeed, Google has continued to use Nexus smartphones to introduce its new Android OS versions. The introduction of a Nexus tablet, if done correctly, could be a way for Google to fix its woes in the tablet market: while it has seen Android be a success globally, taking the top smartphone spot from Apple and Nokia, it has been unable to do the same in the tablet market, where the iPad continues to be the tablet of choice by a wide margin.
Last fall market research firm The Gartner Group estimated that Apple's iPad would capture 73 percent of the tablet market versus 17 percent for Android. The only truly successful Android tablet is using a highly customized (and forked) version of Android that isn't even tablet optimized: Amazon.com's Kindle Fire, which uses a modified Android 2.3 OS.
The sad state of Android tablet sales was re-emphasized when details of a court judgment against Hasbro were made public: the extremely hot (spec-wise) Asus Transformer Prime with the quad-care NVIDIA Tegra 3 processor had retailer fulfillment orders for the next two months that totaled only about 80,000. That's sad compared to the 3 million new iPads Apple sold in the device's first weekend.
Part of Google's strategy will be an online tablet store. Among the manufacturers in the store will be Samsung and Asus, with the latter producing a co-branded tablet to be sold in the store, as well. Google's soon-to-be-acquired Motorola subsidiary will also sell tablets in the store, the sources said.
Google is also considering subsidizing the tablets, making them more competitive with both the iPad and the Kindle Fire. Google is also expected to heavily market the store.
Google had issues with the Nexus One and carriers, trying to sell outside of the normal carrier-subsidized model. Since a recent research note by industry analyst Chetan Sharma indicated that 9 out of 10 tablets sold are wi-fi only, Google could eschew any cellular-powered tablets and bypass that issue.
Also confirmed in the report: the next version of Google's Android operating system, Jelly Bean, will ship in the middle of this year, which will create still more Android fragmentation problems, as the big push of upgrades to Ice Cream Sandwich will only begin in Q2.