NEW YORK (TheStreet) -- Google(GOOG) - Get Report reportedly is preparing an Android tablet with a slightly larger screen to replace its popular Nexus 7 device.

According to DigiTimes, Google is developing a Nexus 8 for release near the beginning of the second quarter.

Google shares rose 0.6% to $1,167.41 soon after markets opened on Friday. 

Google reportedly is choosing 8-inch screens for its third generation of smaller tablets to avoid price competition with current 7-inch models as well as to differentiate them from popular 5- and 6-inch smartphones. A Nexus tablet with an 8-inch screen will also be more competitive with similarly sized tablets from Apple(AAPL) - Get Report, Microsoft(MSFT) - Get Report and others.

There's no definitive word on whether the Asustek Corp. (Asus) will be making this new tablet but sources believe the co-branding collaboration is likely to continue. Google and Asus joined forces to create the original Nexus 7 tablet introduced in June 2012 as well as the Nexus 7 refresh released in July 2013.

Previously, rumors of a Nexus 8 tablet device had mentioned LG as the possible manufacturing partner.

Sales of last year's second-generation Nexus 7 were reportedly short of industry expectations. Sources saidthe model was only able to garner sales of 3 million units by the end of 2013 because of "intense price competition."

Those same sources familiar with Taiwan's supply chain businesses said Google is preparing2 million units for the initial release.

-- Written by Gary Krakow in New York.

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