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Apple and Google's World War II: The Tablets

Google, unhappy at how Android tablets have fared against Apple's iPad, is about to take matters into its own hands ... and it's personal.

The market for Android tablets is a mess.

Sure, there's a lot of innovation going on, especially on the hardware side. And the pace of development is fast and furious. But frankly, other than Amazon's Kindle Fire, and possibly Barnes & Noble's Nook tablets, no one has been able to execute that compelling combination of hardware, operating system, apps, marketing and price to slay the Apple iPad dragon.

Google, which has devoted a lot of time and money to develop the Android OS and then give it away to anyone who wants to build a smart device, is not happy about this.

The company is so unhappy, in fact, that back in December Google Executive Chairman Eric Schmidt let it slip to an Italian newspaper reporter that the company planned to step in to show how to do it right. Schmidt said Google planned "to market a tablet of the highest quality" within six months.

While rumors and speculation have surfaced in the media since then, a report in The Wall Street Journal last week lent new credence and stirred still more reports: Google apparently plans to sell not one but several co-branded tablets, from different manufacturers, in its own online store through Amazon and elsewhere, and soon.

Others have reported that Asus, which manufactures the highly regarded 10-inch Transformer Prime Android tablet, has dropped its own plans for a 7-inch tablet that was displayed at the Consumer Electronics Show in January and instead will be making a 7-inch tablet for Google. The tablet reportedly will be Google's first, and will be aggressively priced at less than $200–possibly less than it costs to manufacture.

Google also plans to introduce its own branded tablets made by Motorola Mobility when Google's acquisition of Motorola gains final regulatory approval. The $12.5 billion acquisition has been approved in the U.S. and Europe and awaiting approval by Chinese authorities.

One possible venue for Google to roll out its new tablets would be at the increasingly exclusive Google I/O annual developer conference in San Francisco in June. Tickets to the conference, priced at $900, sold out in 22 minutes when they went on sale online last month.

On the other hand, Google may not want to wait that long. This is personal. Back in 2010, Apple's then-CEO Steve Jobs said upon seeing the first Android phone that Google had committed "grand theft" against his company, stealing intellectual property. The late Apple guru told biographer Walter Isaacson:

"I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40 billion in the bank, to right this wrong. I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this."

Jobs even met with Schmidt, and told him he wasn't interested in any kind of settlement, only in killing Android.

Since then Apple and Google, through its proxies, have engaged in a global patent and copyright war over whether Android products aren't just clones of Apple's market-defining iPhone and iPad. Billions of dollars have been spent to buy companies just to acquire their patent portfolios—stocking up on intellectual-property ammunition.

Android has been fabulously successful in smartphones, and is now the dominant operating system in that arena. Wireless carriers that initially were shut out from carrying the iPhone, namely everyone but AT&T, were eager to offer a competing smartphone.

A number of manufacturers were happy to comply, especially using an open-source operating system whose price was right: Free.

Not so for tablets. There were no guaranteed supporters like the wireless carriers for an iPad alternative. Early Android tablets were kludgy, using early, buggy versions of Android developed for phones, not tablets, and the hardware was no better. And they were expensive to boot.

Android tablets didn't begin to show they could be anything close to competitive until last summer, when the hardware began to approach that of Apple's iPad, albeit in most cases closer to the first iPad rather than the second version, and when Google released Android 3, also known as Honeycomb, which was the first version made to run on a tablet-size screen. (Google since has released Android 4, known as Ice Cream Sandwich, which is its first truly polished OS.)

Since then, Amazon demonstrated that a non-Apple tablet could be successful when it introduced the hot-selling 7-inch Kindle Fire – by taking a loss on each Fire it sold, at $199. It plans to make up the difference by selling content for the Fire.

Strictly hardware manufacturers can't do that. Apple can, with its well-developed iTunes store, but hasn't needed to with its premium pricing. Sony could, with its PlayStation Network, but it has done a poor job with its tablets.

And Google can. Its content offerings got a slow start, but it recently revamped its Android Market, renaming it Google Play, and is filling out its music, book and movie offerings to go with Android apps. And it has plenty of money to pursue more content deals and spend lavishly on marketing.

We may well see the next stage of the war between Google and Apple play out in tablets, and soon.

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