Google's New Role as Gadget Maker

By JOHN LETZING And AMIR EFRATI

Google unveiled a new tablet computer Wednesday called the Nexus 7 that rivals Amazon's popular Kindle Fire in both size and price. John Letzing has details on The News Hub. Photo: Bloomberg.

Google Inc. stepped up its campaign to become a major player in consumer electronics, topped by a $199 tablet computer that could pressure Amazon.com Inc. while adding yet another challenger to market leader Apple Inc.

The company unveiled the tablet at a developer conference Wednesday alongside other hardware it designed for the first time—a $299 home-entertainment player called Nexus Q and futuristic eyewear dubbed Google Glass that embeds a computer display in a glasses-like device.

For Google, the transition to hardwar¥e has become necessary as Apple continues to encroach on the Internet-search giant's territory with major software applications.

Earlier this month, for instance, Apple touted a number of new software products, including a mapping service that would replace Google Maps as the default system for Apple devices. Meanwhile, software titan Microsoft Corp. last week added its own branded tablet to the fray, furthering the turf wars.

The Tablet Wars

Google unveiled its first tablet in June 2012, entering a market where customers already have a bevy of devices to choose from. See how some of the more popular tablets stack up.

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Like Amazon's Kindle Fire, the Google's tablet boasts a seven-inch screen, a $199 price and is designed to be used with content delivered from the Web—in this case digital books, music and other media available through Google's Play service.

But the Nexus 7 uses a new version of Google's Android software and is packed with more advanced hardware features—including a processor from Nvidia Corp. that provides longer battery life and significant advantages in playing game software.

Most tablets that have come in under Apple's $499 starting price for the iPad have been seen as less-desirable, low-performance products, noted Patrick Moorhead, an analyst at Moor Insights & Strategy.

"Nobody else has been able to deliver a truly amazing device at $199," said Mike Rayfield, general manager of Nvidia's mobile business. "There is significant news in that."

An Amazon spokeswoman declined to comment.

Google's kicks off its three-day I/O conference and showcased Google Play. Digits went live to conference as engineer Chris Yerga discussed new innovations. Photo: Google I/O.

At $199, neither Google nor Amazon are believed to be making much profit—if any—on their tablets. But each company has other motivations.

Amazon.com is banking on e-books and other content purchased for its Kindle Fire and Google on Web-based advertising revenue, though it is also building a bigger business in content distribution.

Google focused much of its presentation Wednesday showing off its library of movies, magazines and music.

"We wanted to design a best-of-Google experience that is optimized around all this great content," said Hugo Barra, Google's Android product management director.

Google's push into designing consumer electronics is a sharp shift in strategy for a company that made its name with Web software, including the most popular Internet search engine. But the company has long had hardware expertise, starting with designing servers that power its websites.

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Hugo Barra, Director of Google Product Management, holds up the new Google Nexus 7 tablet Wednesday at the Google I/O conference in San Francisco.

The company has leaned on outside partners for help in designs of smartphones that use Android, and it turned to Asustek for assistance with the new tablet. But it also added talent to help with both the function and aesthetics of new consumer devices, while its recent purchase of Motorola Mobility will sharply expand its expertise in wireless technology and handset design.

Google's new Nexus Q home-entertainment device—a black orb, looking somewhat like a Magic 8-ball— was internally designed and will be manufactured in the U.S., a departure from recent industry norms in consumer electronics. It is designed to stream music and videos from Google's YouTube video service and its Play service and is seen as a competitor to devices such as Apple TV and the Sonos Inc.'s home-audio system.

Google Glass is the company's second such hardware effort, the product of a unit called the Google X lab. The eyeglasses-like device displays information from the Internet and a user's surroundings in a tiny lens over the right eye. Developers will be able to pre-order the device—expected to arrive next year—for $1,500. Google said consumer pricing will be significantly lower, but it characterized the device as a "premium" product.

Sergey Brin, the company's co-founder, took the stage at its Google I/O event as a prelude to a dramatic introduction. A group of sky divers wearing prototypes of the glasses jumped from a zeppelin hovering above San Francisco, landing on the roof of a convention center—where a combination of bicycles and rappelling brought the devices to the stage.

The presentation came amid questions about Google's other co-founder, Chief Executive Larry Page, whom the company last week said wouldn't be able to speak publicly at the event or the company's earnings call in mid-July because he had lost his voice. Mr. Brin, speaking to reporters, said Mr. Page "did lose his voice and we didn't want to stress him out by having him talk a whole lot." He added that "I'm not worried about him" and said "We want him to recover."

Google, like Apple and other tech companies, needs to court programmers to develop products that work with its hardware and software. The company showed off other offerings Wednesday that included Jelly Bean, a new release of Android that will be released starting the middle of next month, the company said.

One of the new features of Jelly Bean is a "voice search" feature that resembles Apple's Siri voice-activated service found on the iPhone.

Write to John Letzing at john.letzing@dowjones.com

A version of this article appeared June 28, 2012, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Google's New Role as Gadget Maker.