This might be Google’s worst idea yet


If the rumors are to be believed — and let’s face it, when DigiTimes is involved, as it is here, they frequently shouldn’t be — Google has cut a deal with ASUS to create a $199 tablet to compete with not just the iPad but also Amazon.com‘s fast-selling Kindle Fire.

Fools might remember ASUS for an ambitious Frankentech project called the PadFone. The device that’s a phone and a tablet that becomes a notebook PC uses the Ice Cream Sandwich edition of Google’s Android operating system, among other advanced features.

More importantly, the tablet that doubles as a notebook screen is 10.1 inches — or roughly the size of the screen that made the iPad attractive. By contrast, DigiTimes reports that an in-development cheapskate tab would include just 7 inches of screen space. From the article:

Google, in order to compete with Amazon, will cooperate with Asustek Computer to launch a 7-inch inexpensive tablet PC in May-June 2012 and this is expected to bring pressure of price cuts upon other vendors, including Acer, Lenovo, and Samsung Electronics, and in turn diminish gross margins for Taiwan-based supply chain makers, according to industry sources.

Please say it isn’t so, Google. Consumers haven’t taken to 7-inch tablets in the same way as larger alternatives. Don’t take my word for it. Ask Dell and Research In Motion about their experiences. Dell’s Streak tab has twice failed to capture anyone’s imagination, while RIM’s shrimpy PlayBook took far too long to embed email and flopped as a result.

By contrast, Apple sold more than 15 million 10-inch iPad 2 models in the fourth quarter and 3 million more units of its latest tablet during its first weekend on sale. My point? The 7-inch Fire is the exception rather than the rule. Why base an entire product and pricing strategy on an outlier, especially when Amazon, like Apple, has the benefit of bundling simple, cost-effective content access with its tablet?

You’re better than this, Google. If you really want a seat at the tab table, work with your new hardware team to create a 10-inch tablet that embeds the new “Play” digital store in a friendly and intuitive way. Anything less would make for wasted capital.

Looking for a better idea? Download this free special report: “The Motley Fool’s Top ASX Stock For 2012“. Investment Analyst Dean Morel names his top ASX pick for 2012…and beyond. Click here now to find out the name of this small but growing telecommunications company. But hurry – the report is free for only a limited period of time.

OUR #1 DIVIDEND PICK FOR 2016...

Forget BHP and Woolworths. This "dirt cheap" company is growing like gangbusters, and trading on a 5.6% dividend yield, FULLY FRANKED (8% gross). With interest rates set to stay at these low levels for years to come, for hungry investors, including SMSFs, this ASX company could be the "holy grail" of dividend plays for 2016.

Enter your email below to discover the name, code and a full investment analysis in our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2016.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.