Google will soon manufacture its own tablets, due to its pending $12.5 billion purchase of Motorola Mobility Holdings Inc., MMI -0.13% which has been approved in the U.S. and in Europe and is awaiting approval by Chinese authorities. People familiar with the Google’s plans said Motorola tablets are expected to be offered in the online store.A Google spokesman declined to comment, as did an Asus spokeswoman.By selling tablets directly to consumers, Google is upping the ante against Apple, which debuted its market-leading iPad two years ago. Android-based tablets made by Samsung and others have been slow sellers by comparison. Last fall research firm Gartner estimated Apple would capture 73% of the tablet market versus 17% for Android.Google also faces competition from , which last year jumped into tablets with its $199 Kindle Fire, in a move to scoop up the less-expensive side of the market.Google is seeking to increase adoption of its Android software so that its search, maps and other services-which generate the vast majority of its mobile revenue through the sale of ads-become mainstays in the mobile-device world.While that revenue is small compared to PC-based ad sales, it’s a fast-growing category for Google, and tablets can command better ad prices than smartphones. Google Chief Executive Larry Page said last fall the company was on pace to generate more than $2.5 billion in revenue from mobile devices, largely through selling online ads on smartphones.???ipad tips: convert dvd to ipad???Google believes the current model for selling tablets is broken, said people familiar with its strategy.
Google has watched as wireless carriers, who helped Android become the No. 1 mobile operating system for smartphones, have struggled to replicate that success with tablets.While some wireless industry executives said Google’s Nexus One smartphone effort was a failure, Google Android chief Andy Rubin said previously that the company sold more than 100,000 of these phones in three months and “broke even” on its investment.To boost the prospects of its new online tablet store, Google was considering subsidizing the cost of future tablets in order to compete on pricing with Amazon’s Kindle Fire (kindle zoom pdf), said one person with knowledge of the effort.In addition, Google will lend huge marketing support to the online tablet store, said people familiar with the effort.
Since the Nexus One experiment, Google has honed its mass-marketing skills, spending heavily on TV ads and other marketing to promote services other than its Web-search engine.Physical stores will still remain an important sales channel for Google. Some U.S. retailers are anxious for an Apple rival to emerge in the market, said people familiar with the matter. Some retailers that sell iPads have chafed under Apple’s rules that require stores to promote its products more prominently, these people said, and the retailers generate less revenue per sale of Apple products versus other electronic devices.