It is easy to over-estimate the importance of the Kindle Fire. Most pundits look around and see the dominance of the Kindle Fire in the US and assume that it is the benchmark the hardware makers have to compete. While the Kindle Fire may dominate the Android tablet market in the US, it doesn't do so internationally, even where Amazon does do business, like Europe.
Now, the tablet makers have a benchmark set for them internationally by the Google Nexus 7. It is both a benchmark and a response to the popularity of the Kindle Fire. The Nexus 7 is like the Nexus phones, is a demonstration by Google of what it expects the other vendors to improve on. Not to just imitate but build on. Memory is short in the smartphone market (insert your memory upgrade joke here). But just a few years ago, in 2010, the Google Nexus One phone by HTC was the Android phone to have. Since then other phones have come out and have done better, especially the Samsung Galaxt series. It is 2012 and Google has done it again with the Nexus 7 by Asus.
It is now up to other tablet makers to respond. They have to come out with better tablets at competing prices or with tablets that are aimed for more focused markets like the corporate or education markets. They may also have to go beyond the device itself and start building a support infrastructure around their products. This does not just mean hardware, such as charging stations for the education market. Infrastructure also means software, like fleet management systems where settings, apps and data can be device independent within a fleet of devices. The ability to move the data from device to device easily means companies can keep their staff connected and productive even when the device fails or it taken back for maintenance. Blackberry already does this with their Blackberry Enterprise products and that is one of the reasons they are entrenched in the corporate market. Also the ability to read e-mail using one hand. Android phone makers, look into that.
Despite articles stating otherwise, other tablet makers don't have to worry about Google being dominant in the tablet market. They don't have to worry as long as they are willing to do one better. Improving on a Google example is a key success factor. Again, take a look at the Android phone market. The Google Nexus gave HTC a boost but Samsung responded. They came out with more products and features. The Samsung Galaxy range of phones cover the entry level all the way up to the premium Galaxy SIII. They even created their own category, the phablet with the Samsung Galaxy Note. In the tablet space, Samsung tablets are the only premium tablets with the ability to make and receive normal phone calls. Which is a big thing for Asian markets, despite the required bluetooth earpiece. Samsung chooses to be bold and innovate. In the end, it is up to the tablet makers to come with a better tablet than Google
This is going to be hard considering that the Nexus 7 was sold at cost. But take a page from the other tablet maker and work with the supply chain to ensure the components are priced closer to the delivery date. This means as more tablets are sold and more orders come in, the prices for components fall. By pricing it further down the road, the cost price of the tablet drops the more they are sold. This in turn becomes an incentive for the tablet makers to sell more to push the cost price down. The component maker usually respond by offering the same components to other tablet makers to make up for the shortfall in margins. The entire process commoditizes the components and usually leads to more tablets having similar components. Which is not a bad thing because it reduces the android "fragmentation".
Perhaps with the recent announcements, what Google is also saying to tablet manufacturers is that it's time to look beyond the tablet hardware itself and at the ecosystem in general. Google hints this by coming out with the Google Q, the first hardware for social streaming. It's actually an amplifier and media player combo that plays from cloud storage. But it is best controlled by an Android phone. In fact, it extends the Google infrastructure more than the Android platform itself. For a real extension of the Android platform, you only need to look at the various Android-powered media players for TV coming out from China. These boxes allow you to use apps on the TV. Which is great for Angry Birds but may be a stretch for apps that use mutli-touch. Some come with motion controllers that help come close but not really. These types of efforts can be made better to really improve on the overall Android eco-system.
Android tablet makers finally have another choice, update their current tablets to run Android 4.1 or at least Android 4.0. This seems to be counter-intuitive but if you can't make money in the short term, updating your Android devices will go a long way to building brand loyalty for when they do.What ever the Android tablet makers do, the next few months should be interesting.