MG Siegler at his parislemon blog on the DigiTimes report of an upcoming Google tablet:

I have no doubt that Google is working on some kind of “Nexus” tablet — they have to be. To say Android’s entrance into the tablet space has been a flop is a vast understatement. Google needs to get on top of this situation. And fast — Amazon, not Google, is leading now leading the “Android” tablet race.

Yes, certainly. Amazon has coopted Android and made a Kindle platform with an Amazon marketplace using zero services from Google, and therefore getting zero money to Google. Not good for the big G.

If Google is going to undercut the $199 price, the hardware is either going to be shit — or Google is going to have to take a significant loss on each one sold. Maybe they do that and say they’ll make it back in search advertising. But there is real money they’re going to have to pay to an OEM to get them to agree to that.

If you consider Eric Schmidt’s quote from last month: ”In the next six months we plan to market a tablet of the highest quality.” — only the latter option makes sense here. There is no way Google releases a tablet of the “highest quality” and sells it for under $199 without taking a loss.

At $199, selling for a loss, the Kindle Fire is already not very good as far as tablet software and hardware go. Its strength is the Amazon ecosystem becoming available conveniently at such a low entry price. It'll be interesting to see what Google ends up really putting out.