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Google Plans to Enter the E-Reader and Tablet Wars

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The Wall Street Journal is reporting today that Google is making plans to sell a variety of co-branded tablet computers directly to consumers via an online store concept similar to the online fulfillment sites of Amazon and Apple. According to the WSJ, hardware manufacturers Samsung Electronics, AsusTeK Computer, and possibly Motorola Mobility Holdings will be tapped to provide the tablet models.

Similar to Google’s failed experiment with its branded Nexus One phone in 2010, the effort is directed at providing a direct consumer fulfillment model, but this time will include the ability to also up-sell various electronic content services. The WSJ quotes people familiar with this strategy as indicating that Google believes that the current model for selling tablets is broken, including the inability of wireless carriers to gain any market traction as a fulfillment channel.  Also reported was that the company is considering subsidizing the cost of future tablets in order to be able to compete on pricing with Amazon’s Kindle Fire. The article stresses however, that physical stores will still remain an important channel for Google.

If this development turns out to be accurate, it will represent another effort by the search leader to directly make a new presence in the consumer electronics sector.  We recently provided commentary on Google’s entry into the home entertainment device area.

The current tablet and e-reader wars are intense and Apple continues to outpace the market in terms of the consumer “wow” factor and overall market share. Supply Chain Matters trusts that Google will apply the learning from its previous past Nexus One flawed experiment in understanding the required strategies, underlying supply chain support processes and technology capabilities that make up worldwide direct e-fulfillment presence. The bar is set rather high with the current online direct fulfillment capabilities that exist at Amazon and Apple sites.

The WSJ points out that Google is prepared to invest big bucks in the marketing and advertising support of its planned online site. We suggest that some of those monies be allocated toward investments in world-class supply chain planning, execution, intelligence and decision-making capabilities, or to an existing online fulfillment services provider that has the potential to outpace the current capabilities in the market. Supply chain strategy needs to support desired business outcomes. For Google, that outcome is a cool tablet, delivered at a market competitive price, with a seamless online ordering and customer service experience, with adequate supply to meet global consumer demand.

Bob Ferrari

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