Speculation continues to grow that Google Inc. (NASDAQ: GOOG) will release a tablet device later this year and join the gaggle of competitors chasing the iPad from Apple Inc. (NASDAQ: AAPL). The New York Post reports that the search giant plans to roll out a branded tablet that will be priced at $150, undercutting the $199 price of the Kindle Fire tablet from Amazon.com Inc. (NASDAQ: AMZN).
Taiwan’s Digitimes also reports today that Google will release a 7-inch tablet manufactured by Asustek in the May-June timeframe at a $199 price point. All that means is that other tablet makers will have to lower prices and nobody will make money. Except Apple.
According to Digitimes, PC tablet profit margins run at about 10%-15%. Many observers believe Amazon is losing money on every Kindle Fire it sells. If that’s the case, Google is likely to lose even more money on a lower priced tablet. That’s not a business model with legs.