While Google's Nexus 7 tablet is no big secret by now, Bloomberg and Reuters are independently confirming that the tablet is indeed made by Google in cooperation with Asus, it will cost $199, and it will be unveiled at Google I/O (most likely today at the main event).
The news outlets can't confirm the specs too, because the tablet plans are secret, but from what we've heard so far, the $199 version will have a Tegra 3 quad core chip, 1280×800 HD display with a pretty high 216 PPI, 1 GB of RAM, and 8 GB of storage, while there may be another version going for $250 that will have 16 GB of storage.
The tablet will of course run Android 4.1 JellyBean. I think that, without the launch of Google's own tablet at I/O, the JellyBean version would have not existed, or Google would have called Android 5.0 JellyBean, for the fall release. If Google would stick to a 1 year release cycle like everyone else, it would be a lot easier for manufacturers to upgrade all their models within that year to the latest version of Android, before a new one shows up. Otherwise, most users will still be on Gingerbread, two versions behind, like it will be the case now, when Android 4.1 JellyBean will be out.
But since Google is releasing its tablet now, it couldn't have used the eight months old ICS on their brand new tablet. It just wouldn't have been so exciting, and Google need it to be exciting to start gaining market share against the iPad and the Kindle Fire. While it's based on Android, the Kindle Fire doesn't have much to do with Android at all, except for app compatibility (and even that may change in the future as Amazon forks Android further). Reuters reports that an anonymous Asus exec has told them that Google built the Nexus 7 specifically to target the Kindle Fire.
It will be interesting to see if, besides the new OS, Google will do anything about the tablet app situation. The thing is, on 7-inch tablets, “phone apps” don't actually look that bad, so Google may yet again ignore the situation. Hopefully, I'm wrong, because as long as Android doesn't have many tablet-optimized apps, there will be this general perception about the Android tablet ecosystem that it offers far less value than the iPad.
As for the Kindle Fire, it will probably continue to get some press because of the original tablet's momentum. But now that Google has a similarly priced alternative, with an equally rich ecosystem, I doubt that Android users will be interested in the Fire, even if Amazon discounts it in the future to stay competitive. There's just no reason for customers to get a Kindle Fire, when they can get a stock Android tablet from Google, for which they will get all the major Android updates for the next 18-24 months or so.