Google will take on Apple, selling tablet computers via its own online store, The Wall Street Journal reports.
The WSJ reports that the tablets will be made by ASUS and Samsung, existing Google suppliers.
Eric Schmidt, the Google executive chairman, has previously promised "brutal" competition, especially in the tablet market.
In December 2011 Schmidt promised to be "marketing a tablet of the highest quality" within 6 months.
The two greatest challenges faced by Google will be developing sufficient apps of high enough quality for a large screen and producing a product that really stands out against the iPad. The iPad sold 3 million units of the new model in the first three days of launch.
Google has the benefit of following several iPad contenders into the market. The BlackBerry Playbook has flopped, selling just half a million units in the last quarter, and Amazon Kindle Fire which runs the latest version of Android in full colour, with very little difference to Google's latest OS, has generated mixed reviews. Amazon does not release sales figures for its products.
At Mobile World Congress in Barcelona, Eric Schmidt promised that Google Android smart phones will dominate the mobile phone market, and that smart phones will be as cheap as feature phones in early 2013.
He has not made a similar promise for tablets, but a play in the low end of the market could force Apple to drop prices of its popular iPad.