This is an interesting add-on rumor to one we reported previously late last year, in which Google's own Eric Schmidt let slip the possibility of a Google branded Nexus-style tablet. According to this latest rumor, Google really is working on some form of a Nexus-Style Google branded tablet, and it may be coming to market as early as the end of Q1 2012. The tablet will be a 7-inch product and is actually designed to offer up an alternative to the Amazon Kindle Fire instead of compete directly with Apple's iPad series. The rumor-mill further suggests that the pricing will be competitive with Amazon's product as well, and should retail for around $199.99.
Right now, this intel is highly speculative, and in fact, Google Taiwan already released a statement indirectly refuting it. They indicated that Google Taiwan has "never heard about plans of launching an own-brand tablet PC". Of course, this isn't an outright denial, but we should still take this "news" with extra seasoning. If Google does go this route, they will likely be selling the device at an even greater loss than Amazon, since they would probably make the specs more competitive. It'll be interesting to see how this pans out.
Source: AndroidTablets.net via AndroidPolice