Apple wasn’t the only loser in the ruling, however. The case is ultimately a loss for both parties since the same judges also disagreed with Motorola’s previous claim that Apple’s iPad design patent was invalid. As a result, both parties have to cover court costs generated by the dispute that originated in early 2011 — Apple was ordered to pay two-thirds and Motorola one-third.

While it’s getting hard to keep track of who’s suing whom in the mobile industry these days, and on what continent, this case of Apple versus Motorola is basically a fight between Apple and Google. While Apple has sued a bunch of hardware makers that license Android, the Motorola Xoom runs the Android mobile operating system but is also owned by Google, whom Apple has been targeting indirectly through these legal channels.

So while this could be read as a small victory, ultimately, for Google and Android, it’s mostly symbolic, since Google’s hopes for tablet success do not really hinge on the Xoom. Motorola has sold roughly 1 million of the tablets in a little over a year. Google is betting much bigger on the new Nexus 7 tablet, which is just now shipping to customers. The Nexus 7 has been well reviewed and is seen as the first true Android tablet that could challenge the iPad’s tablet dominance.

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For Galaxy Nexus owners, the update is marginal because these devices have been running Android 4.0 since they launched. Faster screen rotation and and improved camera interface are likely the only noticeable changes. But for those that own a Nexus S phone or Xoom tablet, this will be the first taste of the software known as Ice Cream Sandwich. (Update: As noted by some astute commenters below, the CDMA/LTE versions of these devices don’t have ICS; the GSM Nexus S and WiFi Xoom in some regions received Android 4.0.3 prior) My own use of Android 4.0 on both phones and tablets shows a more intuitive and refined interface that is a vast improvement over the prior version of Android.

One other quick note: I purchased an unlocked Galaxy Nexus overseas and use it in the U.S. on both T-Mobile’s and AT&T’s HSPA+ networks. This model is getting the update, but Verizon’s Galaxy Nexus with LTE is not part of this update wave. It’s more likely that Verizon itself will provide an Android update for two reasons: Carriers typically offer updates for the devices they sell and because there’s CDMA-specific bits in the software.

This is where the vast array of hardware running Google’s software rears its ugly head. The same devices on different networks can have different software, user interfaces, apps and features. Because I tend to buy Nexus devices or install my own custom ROMs — I’ve been running Android 4.0.4 for weeks already — I’m generally not impacted.

But for the few hundred million other Android device owners out there, this frustrating situation isn’t getting any better. At last check, only 1.6 percent of all Android devices run Android 4.0 software. Compare that to the estimated 61 percent of iOS devices updating to version 5.1 within 15 days, according to one iOS developer. Simplicity can sometimes be boring, but at least you know what to expect.

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The low profile kept by Android tablet makers at CES was notable, especially given Android 4.0′s promise as the version of Android that would unify the smartphone and tablet worlds and give developers a cleaner interface atop which to build tablet apps. A few companies such as Lenovo and Asus showed off Android 4.0 tablets scheduled for later this year, but tablet mainstays like Samsung were quiet regarding their plans for the new software on tablets.

Motorola fulfilled a promise it made a few weeks ago by starting to ship Android 4.0 to Xoom customers Wednesday, but it appears that only those who purchased the Wi-Fi version will get the update. Motorola didn’t immediately respond to an inquiry wondering when or if those with 3G versions will get the upgrade, which might not matter all that much given how relatively few Xooms have been sold either through wireless carriers or with Wi-Fi connections only. Updated: Motorola said that the 3G/4G Xoom will get the upgrade but declined to provide a time frame for that move.

Chalk it up to another example of how carriers exert so much control over the distribution of updates for Android, a subject discussed at length in 2011 that likely won’t go away in 2012.

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The new operating system brings many user interface updates and new functionality such as:

• Updated browser with faster rendering
• Redesigned app launcher
• Richer resizable widgets
• More versatile imaging capabilities
• Data Manager to control your network data usage
• Type via voice capability
• People application: Throughout the system, social groups, profiles, contacts are all linked together to create easy access and more integration in your communications
• Gallery app redesign

It makes sense for the Xoom to see Ice Cream Sandwich before other tablets on the market.The device offers a “pure Google Experience” and was the tablet used to show off Android 3.0, also known as Honeycomb, at the 2011 Consumer Electronics Show.

My own use of the Xoom with Honeycomb showed a tablet and operating system rushed to market; it took several months for key software and hardware features to arrive on the device. Even though I have concerns about the inconsistency of Android 4.0 on a tablet compared to phones, the overall Android experience should be much better on the Xoom with the updated software.

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Motorola’s Xoom was the first Android 3.0 tablet when it launched with Google’s Honeycomb software in February. But after spending time with the device, I found both the hardware and software to be rushed to market. The 4G radio Motorola touted wasn’t yet supported — and didn’t appear until six months later — while the user interface for Honeycomb seemed non-intuitive for mainstream consumers. Combine those observations with a high-price and lengthy contract, and you can see why Motorola hasn’t yet shipped a million Xoom tablets, let alone sold all of them.

So now we have two new Xoom tablets arriving, and both will ship with the marginally improved Android 3.2, not Android 4.0. Google has only introduced Android 4.0 publicly for use on smartphones, but we know the software is meant to unify smartphones and tablets. My guess is that tablet-makers are still working to integrate the new platform on their hardware or they simply don’t have it yet.

I understand that. But why release new hardware when new — and likely much better — software to run it is coming very soon? It’s easy to dismiss this by saying Motorola will offer an update to Android 4.0 in the future, but the delayed LTE upgrade doesn’t instill confidence in such a statement.

Anyway, a new software platform doesn’t change the hardware Motorola plans to ship. The Xoom 2 looks similar to its predecessor, with some subtle changes. The corners of the slate are slightly cut-off, much like some recent Motorola smartphone designs. The 10.1-inch tablet gains a chip that’s 20 percent faster, now a 1.2 GHz dual-core chip, and it shaves 100 grams in weight, plus it adds stylus support for enterprise customers.

Meanwhile, a consumer-focused smaller version is also launching. Most of the Xoom 2 Media Edition specifications are the same as the bigger Xoom 2, but the device uses an 8.2-inch screen and is around 40 percent lighter than its big brother. The smaller size means a smaller battery though: The Media Edition gets six hours of web browsing on a charge compared to 10 hours on the larger Xoom 2.

Both devices come with 1 GB of memory, 16 GB of storage capacity, a 5-megapixel rear camera, 1.3-megapixel front-facing camera, Wi-Fi, and a splash-guard coating on the Corning Gorilla Glass displays. Motorola hasn’t shared the price yet, so unless these are cost-competitive, I think they’ll need Android 4.0 to sell in meaningful numbers.

Some Android tablet enthusiasts will like these as they are of course, but I don’t see a compelling difference between these and the original Xoom. If that model didn’t sell, what’s going to move these off the shelves? There isn’t much, on paper at least, that addresses the reasons why the original Xoom wasn’t a big seller.

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If the new Transformer arrives with the Google’s current software, it will surely see an upgrade to Ice Cream Sandwich, known as Android 4.0. That software refresh will do far more for the Android tablet market than more powerful hardware, thanks to new software features and user interface tweaks. I’m not suggesting that Nvidia’s silicon isn’t needed nor impressive. Early video demonstrations of the Kal-El chip — which also has a dozen graphics cores — show incredible game fluidity and superb lighting effects. As a hardware addict, I welcome the advanced chips that Nvidia and others are bringing to new devices. But hardware isn’t the problem.

If faster chips alone meant “winning” the tablet war, Android would have had the edge. When the first Android 3.0 tablet — Motorola’s Xoom — arrived in February, it had a dual-core chip. Apple’s iPad didn’t gain two cores until the April release of the iPad 2, but the Xoom didn’t even dent the tablet market compared the iPad: Motorola has shipped (not sold) 690,000 units in the first two fiscal quarters of availability, while Apple sold 11.12 million iPads in the last quarter alone. Motorola’s next investor call is later this month, so we’ll see if Xoom shipments have increased or not.

Why the huge difference in sales? For one, the Xoom’s hardware wasn’t quite complete as it took more than six months to bring the promised LTE mobile broadband radio to the tablet. But more importantly, the interface was fairly muddled and few software applications were created to take advantage of the form factor. Many existing Android smartphone apps ran on it, but added no extra benefit to go with the larger screen. The Xoom is just an example; no other Android 3.0 tablets have rivaled the iPad’s sales either. Even collectively, Android tablets are outsold by the iPad at least five-fold, if not more.

While hardware is still an important enabler of mobile devices, gone are the days when the “most powerful rigs” are the best. Software, services and user experience are equally valuable, if not more so. Until Android 4.0 arrives on tablets, all the computer cores in the world aren’t likely to radically change the mix of tablet sales by platform.

When Ice Cream Sandwich does arrive, that’s when Android will better compete with iOS in the tablet market, because all of the pieces of the successful tablet puzzle will be put together. Capable hardware in the form of chips from Nvidia and others combined with forward-thinking apps that take advantage of the hardware will start to make a difference. Add in Ice Cream Sandwich’s much improved, consistent Android user interface and then we’ll see if Android tablets are ready to take on the iPad.

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The new Xoom, which is initially being sold by Best Buy, is being marketed as a “family tablet” now. It is effectively the WiFi-only version of the Xoom that first went on sale in March, but now with only 16GB of memory. Eventually the price of the Family Xoom will rise to $399, according to the WSJ.

That WiFi version, with 32GB of memory, is selling for $499, which is also the entry-level price for the iPad.

But although this is clearly a discount on the past device, has the boat zoomed away now for the Xoom?

With the pared-down Kindle Fire from Amazon (NSDQ: AMZN) now hitting the market at $199, other tablet makers, such as RIM (NSDQ: RIMM), have been aggressively discounting their tablets, but it has been with an unclear strategy as to how to really pick up sales: a device that has not ignited the public at one price point is not necessarily going to do it at one $100 or $200 lower.

The only one that seems to have really captured buying demand through a discounting policy was HP (NYSE: HPQ), which, deciding it would pull out of the tablet market altogether, sold its TouchPads through a fire sale, selling the most basic devices for as low as $99.

Motorola has not gone quite that low yet; but so far its strategy has failed to produce a real competitive force against the iPad. According to its most recent figures, Motorola says that it has shipped 690,000 tablets so far this year — no word on how many of those have actually sold. We may have an update with more concrete information on October 27, when Motorola Mobility reports its Q3 earnings.

As a point of comparison, Apple (NSDQ: AAPL) will be reporting its earnings tomorrow, and analysts are guessing between 12 million and 14 million iPads will be sold.

But if you think Motorola, RIM or HP are the only ones getting their tablets discounted, think again: even Apple’s iPad can also be had for next to nothing. It has been offered free by some carriers like Softbank when users sign up to premium contracts. And in France, Orange is running a student-buying program offering the iPad for as little as €1 ($1.30).

It’s probably fair to argue that Apple would have probably cornered the market even without those special deals — although they will have certainly helped pick up the second and third tier of buyers after a good run at the early adopters, a luxury that Motorola and the others can likely only imagine.

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Few makers of Android tablets have officially announced sales figures, but some have mentioned the quantity of shipped tablets. Motorola’s Xoom was the first Android Honeycomb slate to launch in February of this year, but the company says only 440,000 units were shipped in the second fiscal quarter this year, for example. That compares to the 9.25 million Apple iPads actually sold during the same time period. My own estimate of Android tablets sold this year was only 1.25 million as of  July.

The reported sales figures for Amazon’s Kindle Fire come from a verified source, says Cult of Android. Even if they didn’t say that, I’d have no problem believing the data for two reasons. First is the $199 price of Amazon’s tablet. It’s far less than the entry level iPad, which goes for $499. Of course, the Fire is a 7-inch device, so it really should be less expensive than a 9.7-inch iPad. But it’s also far less than other 7-inch slates from Samsung, Acer, and HTC, even after some of those tablets saw a big price drop once Amazon introduced the Kindle.

Another reason the Fire is likely selling well is Amazon’s media offerings. After a few hours of research yesterday, I found that Amazon rivals Apple in terms of television shows, movies, and music like no other competitor today. And of course, Amazon is synonymous with Kindle e-books, which the company also sells for the Fire tablet. The relatively inexpensive device, complete with a sophisticated web browser and curated software store provides most of what mainstream consumers are looking for in a tablet and it does so at just $199.

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The timing of the report is interesting because it conicides with two other bits of news on the TouchPad: Estimated and actual sales. Last night, an AllThingsD report referred to HP’s tablet as the “OuchPad,” based on poor sales. Retail chain Best Buy has reportedly sold just 25,000 of the 270,000 TouchPads it has in stock, according to sources “familiar with the matter.” This follows only 612 TouchPad sales in a one-day promotion at Woot.com earlier this month, when the tablet was discounted to $379. Estimated sales aside, tomorrow could reveal actual sales information straight from the horse’s mouth, as HP is set to report earnings at 2pm PT.

All of these developments follow a price cut from HP, which reduced the cost of both TouchPad models by $100. It’s possible that it portends doom and gloom for the product, but I think that’s a premature sentiment for a number of reasons. It’s also interesting because some have suggested — rightly, I’d add — that if a tablet can’t match the iPad in terms of user experience and apps, it must be priced lower than the iPad. With the new pricing, HP’s TouchPad surely fits the bill; it actually offers a solid user experience based on my usage, but lacks the ecosystem iPad owners enjoy for accessories, media services and third-party applications.

Although a survey of potential tablet buyers doesn’t equate to sales, it shows promise for the TouchPad, especially considering the device only launched early last month. It also wasn’t until the middle of July, or roughly 30 days ago, that HP began a TouchPad marketing campaign in earnest. And yet, more people surveyed are familiar enough with the device name and brand to consider buying it over a Motorola Xoom, Samsung Galaxy Tab 10.1 or BlackBerry Playbook.

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