Google Nexus 7.
Google Nexus 7. Google

Google (Nasdaq: GOOG), the No. 1 search engine, showed its first tablet, the Nexus 7, priced at $199, as part of its annual Google I/O developers conference.

More than 5,000 developers paid $900 apiece to attend the Google event, where the device, manufactured by Taiwanese partner Asustek Computer (Taipei: 2357), running on the new Jelly Bean version of the Android OS, was shown. Coming after Ice Cream Sandwich, Google said Jelly Bean specifications will be available to developers next month. It wil also feature voice-recognition features dubbed Voice Search to rival the Siri features of the iPhone from Apple (Nasdaq: AAPL).

Google said the device will be priced at $199 for an 8 GB version, although a 16 GB one could be priced higher. Customers can order it immediately for shipment in mid-July. The Nexus's heart is a Tegra 3 chipset from Nvidia Corp. (Nasdaq: NVDA), compared with the ARM processor from Arm Holdings (Nasdaq: ARMH) of the UK at the heart of Apple mobile platforms.

The Google Nexus will be pitched directly against the iPad line from Apple, the world's most valuable technology company; the Kindle Fire from Inc. (Nasdaq: AMZN), the No. 1 e-retailer; the Galaxy Tab line from Samsung Electronics (Seoul: 005930) and the forthcoming Surface from Microsoft (Nasdaq: MSFT), the world's biggest software company.

The new product, available next month, would be Google's first hardware product, although the Mountain View, Calif., company last month completed its purchase of Motorola Mobility, one of the world's biggest makers of Droid phones as well as consumer electronics. The Nexus 7 has a 1280 by 800 HD display, weighs 340 grams or 12 ounces, a front-facing camera and is enabled to receive WiFi, Bluetooth and NFC.

Google Wednesday also introduced another consumer product, the $299 Nexus Q, a home media controller that plugs into a TV or stereo speakers, to download content from the Cloud. The innards are manufactured in the U.S. The Nexus Q will also compete against a more expensive Apple product, the Media Center.

The Google move also may further damage relations with Apple. Google Chairman Eric Schmidt resigned as an Apple director in 2009 after a three-year term.

At the time, Apple CEO Steve Jobs said, Unfortunately, as Google enters more of Apple's core businesses, with Android and now Chrome OS, Eric's effectiveness as an Apple board member will be significantly diminished since he will have to recuse himself from even larger portions of our meetings due to potential conflicts of interest.

Apple now dominates the tablet sector, taking about 60 percent share last year, IDC estimated, with about 40 percent for Android. IDC expects Apple to maintain that share this year, with Android's share slipping to 36.5 percent due to the Microsoft Surface, which will use Windows 8.

Analysts at IHS iSuppli who'd seen an early version of the Nexus 7 estimate it will cost Google between $130 and $210 to manufacture.

Market researchers say there's a huge demand for tablets, with unit volumes expected to reach 107 million this year, IDC predicts, with iSuppli seeing 85 percent growth to as many as 126.6 million.

So Google's entry is clearly positioned at an exploding market, although it will also have to offer content and entertainment, along with connectivity to satisfy consumers.

Google said its Google Play already provides 40,000 apps plus music, magazines and TV shows from providers including Sony Corp. (NYSE: SNE), the NBCUniversal unit of Comcast (Nasdaq: CMSCA) and Walt Disney Co.'s (NYSE: DIS) ABC Studios.

Shares of Google rose $4.62 to $569.30 on Wednesda, while Apple shares rose $2.47 to $574.50.