Amazon may be having problems with new Kindle front light design

There have been rumors for some time that Amazon is working on a front-lit version of its black & white Kindle eReaders. A blog claimed to have actually seen a working prototype of a front-lit Kindle, shortly before Barnes & Noble launched its front-lit Nook Touch with GlowLight. However, DigiTimes' sources report that Amazon has told some of its parts vendors to stop shipments, and it may stop orders for E Ink displays through July and August, because of a problem with the design of its front light. If true, it suggests that Amazon won't be able to launch a front-lit eReader until late Q3 or Q4.

Google and Asus expected to unveil 7" Nexus tablet next week at Google I/O

DigiTimes reports that Google's and Asus' new 7" Nexus Android tablet, to be built for the companies by Quanta Computer (the same company that manufactures the Kindle Fire,) will be launched at next week's Google I/O Conference in San Francisco. The price will reportedly be $199, and the tablet is said to include a quad-core Tegra 3 processor and a front-facing webcam. DigiTimes also says that the tablet will be preloaded with Google's Chrome browser for Android; it's not clear if Chrome will replace or be installed in addition to the legacy Android browser.

DigiTimes reports Microsoft is outsourcing Surface tablets to Pegatron; expected prices above US$599

DigiTimes reports that its sources say that Pegatron, which is one of Apple's iPad manufacturers, has won the contract to manufacture Microsoft's Surface tablets. These sources also estimate that the price of the Surface for Windows RT, which will compete directly with the iPad, will be priced above $599, while the Intel-based Surface for Windows 8 Pro will be priced above $799. In both cases, the high prices may outweigh the appeal of the tablets' industrial design. In addition, Microsoft has said that the tablets will only be sold in its retail stores (of which there are 21, plus four more under construction,) and online. Without other retail outlets, it's highly unlikely that Microsoft can get the volume it needs to drop the tablets' prices enough to be competitive with Apple and other manufacturers.

DigiTimes reports that two new 7" Kindle tablets are under development for release in Q3

DigiTimes reports that Amazon is planning new Kindle tablets and hardware eReaders for release this year and in 2013:

• Sources report that two 7" tablets are under development for release in Q3: A higher-end model with 1280 x 800 screen resolution and a faster processor, priced at $199, and a model similar to the existing Kindle Fire, with 1024 x 600 screen resolution, priced at $149. 
• The existing Kindle Fire's price will be dropped to $149 to make way for the new models. 
• DigiTimes' sources say that development of an 8.9" model has been halted, and release of a 10.1" model has been delayed to Q4 2012 or later. The website doesn't speculate about reasons for the (rumored) changes in Amazon's (rumored) product plans, but one reason might be the popularity of the new iPad's Retina Display. Unless Amazon can release a 10.1" model that has a screen comparable to the new iPad with a price well below the iPad 2, it doesn't make sense to go to market.
• DigtTimes writes that a 6" front-light-equipped black & while Kindle will be released in Q3 "at the earliest."

The tablet makers' dilemma

Last week, DigiTimes wrote that "Android 4.0-based tablet PCs will be the dominant products in the segment in the third quarter of 2012 as most brand vendors will not rush to launch Windows 8-based models until the fourth quarter." The reasons for holding off on introducing Windows 8 tablets are fairly clear:

• Microsoft had been expected to release Windows 8 in Q2, but it's now looking like it won't be released until Q3 or possibly even Q4. 
• It will take time for vendors to test Windows 8 and related products for their tablets. 
• Vendors are suspicious of Microsoft's intentions with the Barnes & Noble deal--is B&N going to become Microsoft's "preferred" tablet vendor in the same way that Nokia is favored for Windows Phone 7 smartphones?
• Vendors see no reason to rush Windows 8 tablets to market. 

But, will Android 4.0 products be "dominant" in Q3? Not likely. According to Google's Android Developers site, all versions of Android 4 constitute less than 5% of the active Android installed base. That number overstates Android 4's true share because Google bases its installed base numbers on usage of the Google Play website, which only "authorized" devices can access. If the Kindle Fire and Barnes & Noble Nook Tablet and Nook Color were included, Android 2.3.3 to 2.3.7 would have even more market share than the 63.9% reported by Google.

That leaves tablet vendors other than Apple, Amazon and Barnes & Noble in a quandry. Should they continue to invest in Android tablets when, to date, Google hasn't been able to provide a version of Android for tablets that's compelling to consumers? How much hope should they place in Google getting it right with Android 5? Should they follow Amazon's model and fork a stable version of Android with their own user interface, perhaps even going back to 2.3.X?

Is Windows 8 the solution? Possibly--the Windows Phone user experience is superior to that of Android, and both Windows Phone and Windows 8 uses Microsoft's Metro design language  However, Windows 8 is the "floor wax/dessert topping" of operating systems. It's designed to be used for both touch-oriented tablets and keyboard-oriented personal computers, and as a result, it has compromises that iOS and Android don't have. The "tablet" portion of Windows 8 looks like its usability will be competitive with iOS, but there are likely to be very few apps available for it at launch, compared to more than 600,000 for iOS. The "personal computer" portion of Windows 8 looks and works almost identically to Windows 7, which means that it has nothing to do with the tablet apps.

One the one hand, computer companies can't afford to concede the tablet market to Apple. On the other, it's clear that Android, at least the stock version offered by Google, isn't competitive with iOS. Windows 8 is likely to be better, but as a tablet operating system, it's starting where Android was more than a year ago. So what should tablet vendors do? The safest approach is to wait and see: Develop prototypes of Android 5 and Windows 8 tablets that can be taken into production quickly, but let competitors test the waters first. Don't commit the resources to production or distribution until one of the operating systems proves that can compete with iOS. Another option is to fork and skin Android in order to improve its user interface--riskier, but possibly  the only way to make Android a viable alternative to iOS.