Will Google Race to the Bottom with a $150 Nexus Tablet? - Time

With every million iPads that Apple sells, Google’s Android tablet problem becomes more of a crisis. To date, not a single proper Android tablet has seen mainstream success, and even in aggregate they’re not nearly as popular as the iPad.

I say “proper Android tablet” because there are a couple of devices that have done well: Amazon’s Kindle Fire and Barnes & Noble’s Nook tablets are based on Android’s open source software, but they bear little resemblance to the operating system Google created. Yet these tablets, which sell in the $169 to $250 range, have sold in the millions â€" not iPad numbers, but respectable quantities nonetheless.

So it’s no surprise that Google is rumored to be pursuing an Amazon-like strategy for its own tablet, reportedly with “Nexus” branding. The latest scuttlebutt, from Android and Me, says that Google and Asus are working together on a 7-inch Android tablet with a price tag of $150 to $200. Asus was working on its own tablet, the quad-core, $250 Asus Memo 370T, but the company has reportedly scrapped that device so it can work with Google on a cheaper tablet with lesser specs.

(MORE: Asus MeMo 370T: The 7-Inch, Quad-Core, $250 Dream Tablet)

The bad news for techies is that Asus and Google may not use Nvidia’s quad-core Tegra 3 processor, instead opting for a cheaper dual-core chip. For Google, however, specs aren’t as important as sales, and the truth is that a budget tablet from a reputable brand has a better chance of commercial success than a more expensive device with better specs. If Google wants a piece of the Kindle Fire and Nook Tablet’s market, it needs a sub-$200 tablet.

But pricing is only part of the equation. The other reason the Kindle Fire is popular is its ecosystem of e-books, music, movies and apps. We now know that Google is trying to mimic that ecosystem with Google Play, a recent rebranding of its own digital content stores. Instead of the Android Market, we now have Apps on Google Play, along with Music on Google Play, Movies on Google Play and Books on Google Play. The message is clear: When you buy Android, you’re buying into Google’s content services.

Andy Rubin, Google’s head of Android, has confirmed that establishing an ecosystem is a big part of the company’s tablet strategy for 2012. “The educated consumer realizes it now that they’re either picking the Apple ecosystem or the Microsoft ecosystem or the Google ecosystem … we’re going to do a better job at making people understand what ecosystem they’re buying into,” Rubin told The Verge. Putting the pieces together, it’s obvious that a cheap tablet with content servies galore is how Google plans to fight back against Apple â€" and for that matter, Amazon and Barnes & Noble.

But pulling it off won’t be so simple. There’s no guarantee that mainstream customers will take to Google’s content offerings. When it comes to movies, books and music, pulling people away from the iTunes and Amazon empires won’t be easy.

Also, championing a 7-inch tablet may be risky for the long-term health of Android tablets. I’m a fan of this screen size, but it’s not the best canvas for full-size tablet apps. Few developers are optimizing their Android apps for 7-inch screens, even on Amazon’s Kindle Fire. If a 7-inch Nexus tablet were to become popular, I worry that app developers would still ignore the screen size. Meanwhile, 10-inch Android tablets, which are in the most dire need of full-size apps, would not benefit from a smaller tablet’s success.

I’m not saying a Nexus tablet would be a failure. If Google and Asus are really working together, and they can hit a $150 price point, it’ll probably sell well, especially if Google puts some proper marketing muscle behind the device. But I can’t imagine there will be much short-term profit in it, and there’s no guarantee of long term benefits for Android. Still, with Apple raking in the cash on a more popular, more expensive product, a race to the bottom may be Google’s only option.

MORE: Why Apple’s New iPad Should Be Google’s Wake-Up Call