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Google Introduces Nexus Tablet, Stepping Up Apple Challenge

Android Tablets So Far Have Less Than Half Apple's Share of Market

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Google has introduced a $199 handheld computer called the Nexus 7 that has a 7-inch screen and is designed to help the company vie with Apple, Microsoft and Amazon in the surging market for tablets.

The Nexus 7 will use Google's latest version of the Android operating system, called Jelly Bean, the company said at its Google I/O developers conference today in San Francisco. The tablet, to be available in July, is being made in partnership with Taiwan's Asustek Computer.

Though Android has grabbed more than half of the smartphone market, tablets with the software have won less than half the share of Apple's iPad, and Google will face new pressure from Microsoft, which unveiled its own tablet last week. The tablet market may almost double this year to 118.9 million units, according to Gartner Inc.

"The tablet market is a major challenge for Google at this point," said Clayton Moran, an analyst at Benchmark Co. "They need to have a competitive product with the iPad."

Shares of Google, based in Mountain View, Calif., gained less than 1% to $569.60 at 2:02 p.m. in New York. Through yesterday, the stock had fallen 13% this year.

Android tablets are already available from companies such as Samsung Electronics, HTC and Motorola Mobility Holdings, which Google acquired last month for $12.5 billion. Still, Google is working to capitalize on its own brand name. It also seeks to woo consumers with a slimmer device that features the latest software yet carries a lower price than the larger iPad, the newest versions of which start at $499.

"When you look at the tablet market, you have iPad -- and others," said Rhoda Alexander, an analyst at industry researcher IHS iSuppli. "Everybody is trying to figure out how to compete against the iPad. And I just see it as just one more experiment going down that road."

This will be the first tablet to get Google's Nexus designation. Google has worked with manufacturers such as Samsung in the past for Nexus smartphones to highlight the best features of Android software.

Gartner expects the iPad to remain the global tablet leader through at least 2016, even as it loses some market share. The iPad will account for an estimated 46% of shipments in 2016, down from a projected 61% this year. Android may have 37% by 2016, a gain from 32%.

Microsoft, which had zero percent of the tablet market last year, is expected to nab 12% by 2016. That number may increase, because the Gartner report was issued before Microsoft unveiled its Windows-based Surface tablet, which is likely to be released by the end of the year.

Sales of Android-based tablets have been held back by a lack of developers for the platform. Apple's App Store has more than 650,000 downloadable applications that include games, news and travel tools for the iPhone and iPad. Though Google Play has more than 600,000 for Android devices, Apple's success with the iPad has given it a greater lead in apps designed specifically for tablets, said Carolina Milanesi, an analyst at Gartner.

"At the moment, we don't see the ecosystem being strong enough to compete," Ms. Milanesi said. "There's just not enough apps that give you a rich experience on the tablet as you have at the moment with Apple."

HootSuite Media Inc., whose programs help users manage activity on Facebook Inc. and Twitter Inc. social networks, has had an application on the iPad since 2010, the year it debuted, said CEO Ryan Holmes. HootSuite plans to release an application for Android tablets, he said. "We haven't had strong enough demand yet to prioritize on development of that ," he said. "For our development priorities, it's all demand-based."

A judge handed Apple an unrelated victory in the tablet wars late Tuesday when she ruled that Samsung must immediately halt sales of its Galaxy Tab 10.1 while the companies litigate Apple's patent-infringement claims.

-- Bloomberg News --

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