Industry sources have confirmed that Google is developing a low-budget tablet in an attempt to bolster a floundering stable of Android-based tablets. The rumored 7-inch tablet, dubbed the Nexus Tablet, could cost the same price as the Amazon Kindle Fire, $199, or even better -- $149.

Industry sources say that Asus is working with Google to make a 7-inch tablet loosely based off of the Asus Memo 370T, which debuted at CES 2012.

An anonymous source from a U.S. supply chain has told the tech blog Android and Me that the new small-form tablet will cost $149, while the more visited site The Verge says otherwise. The Verge has a source that says the new tablet will cost $199.

Although there's some dissonance among industry reporters, there's one thing that they can agree on: The Nexus Tablet will be based off of the Asus MeMo 370T, which made its debut at CES 2012 during an Nvidia presentation.

The Asus Memo 370T, which has been scrapped according to multiple industry sources, was one of the first small-form tablets to house Nvidia's Tegra 3, a powerful quad- or dual-core processor made specifically for mobile devices. The Asus Memo 370T, as it was shown, ran Android 4.0 (Ice Cream Sandwich) and included Micro HDMI, Micro SD and Micro USB slots. It didn't have a front-facing camera, but it did include a rear-facing one.

Most experts suspect that Google will no longer include Nvidia's Tegra 3 processor in order to keep costs low on the 7-inch tablet its developer. Experts also believe that the Nexus Tablet will be made in the same light as the Nexus smartphones -- with little-to-no alterations on the operating system and with frequent updates served up by Google.

The Verge and Android and Me have not specified a timeframe for the release of the Google Nexus Tablet. Google hosts a developer conference every year, called Google I/O, where other major announcements have been made for the Android developer community. Most recently, Google announced Android Ice Cream Sandwich (4.0) at the conference in May 2011.

The educated consumer realizes it now that they're either picking the Apple ecosystem or the Microsoft ecosystem or the Google ecosystem... we're going to do a better job at making people understand what ecosystem they're buying into, said Andy Rubin, co-founder of Android that now works for Google, in an interview with The Verge.

Can The Nexus Tablet Save Android Tablets?

If the rumors are true, that Google will work with Asus to release a low-budget Android-based tablet called the Nexus Tablet, it may not actually help resolve Android's most critical shortcoming: fragmentation.

Android developers worry that it has become too costly and time-consuming to develop multiple versions of an app for the same operating system. (PHOTO: REUTERS)=

The success of low-budget Android-based tablets such as the Amazon Kindle Fire or Barnes and Noble Nook have proven that there's a high demand from consumers for small-form, affordable tablets, but such success hasn't created a standardized form-factor and hardware protocol for Android.

While Apple allows developers to create apps in a strict, controlled ecosystem, Google allows several manufacturers to dabble in their open-source operating system. Each Android tablet has a different screen size. Each has different hardware. And worst of all, each manufacturer can modify the operating system so that it's nearly unrecognizable. Amazon has gone so far as to create its own Android app market.

Ask any independent software vendor (ISV) if they want to program for multiple versions of the same operating system and they'll tell you 'Hell no!' wrote Steven Vaughan-Nichols of ZDNet.

Android is growing, but it's also growing complexity at the same time, said Peter Vesterbacka, a founder of Rovio and Angry Birds developer in an interview with Vaughan-Nichols. Device fragmentation [is] not the issue, but rather the fragmentation of the ecosystem. So many different shops, so many different models. The carriers messing with the experience again. Open but not really open, a very Google-centric ecosystem.

The Google Nexus Tablet, if it is released, may undercut the Amazon Kindle Fire, but that may not be enough to freeze the rampant success of the Apple iPad; ultimately, garnering a large majority of mobile operating system market share is the only concern of anyone working on Android.

Consumers--a key ingredient to success--have proven that there's a large market for low-budget tablets, but developers--the other key ingredient--have also spoken: The more fragmented the Android ecostystem becomes, the more difficult it will be to create apps for. If Android becomes to costly to develop apps for, productions companies will stop doing so altogether. The best example of this is when Mika Mobile recently halted the production of its Android apps.

A cheap, new tablet could help Google snag a larger percentage of the mobile operating system market, but it may not actually lure more app developers. And without apps, no tablet-based operating system can survive. Need further evidence? Ask Research In Motion (RIM) how Blackberry App World is doing.