Update (August 7th): It appears that
Google hasn’t licensed Android to Augun
and as such the Android Market will not work on this product.

A Kmart circular came out last week with an uber-geeky product that perked up a few ears in the gadget community.  Augen’s 7-inch Gen-78 Android tablet which runs Android 2.1 —take that Sony (SNE) and Dell (DELL)! — is on sale for $150 (normally $170).  The tablet is as bare bones as it gets, but it does work and has some features which may interest those who can’t reconcile the $500+ price of Apple’s (AAPL) iPad.

• Android 2.1 (no skinning) 800×480 Display
• WiFi 802.11G
• 2GB of storage +SD card slot (up to 32GB)
• 256MB of RAM (same as iPad)
• HDMI out for 720P viewing on an external display
• Android Market access
• eBook reader
• YouTube app, Maps (is that Skype I see on the bottom left?)

To make things even more interesting to hackers, Cyanogen already has Android 2.2 Froyo working on the tablet. Yes, including Adobe’s Flash. The hacker interest should only make devices like this more appealing.

That’s a pretty interesting set of features for less than a third the starting price of an iPad.  In this depressed economy, it isn’t hard to imagine more than a few people interested in this product.  Kmart perhaps got ahead of itself in advertising the unit as well.  The unprecedented demand combined with lower than expected supply means you can’t hardly find one in any Kmart across the country. Kmart, however, is keeping potential customers updated on its blog:

UPDATE: The Augen 7″ Android Tablet’s SKU is 811470015254; if you bring this number with you up to the register as you request your raincheck, this may make the process a bit faster.

UPDATE (8/3/10): The unexpected demand for this product is continuing to cause some product shortages but we’re working to replenish our supply as soon as possible.

UPDATE (8/5/10): Kmart strives to continuously find exciting consumer electronics products and offer them at Smart prices to our customers. On July 25th Kmart had unexpected phenomenal response to the Augen 7” Tablet which runs on the Android OS. This product that was featured in the Kmart circular for $149.99 and has currently sold out. Eager customers who found shortages of the tablet were offered “rain checks” through July 31st to ensure they could secure the Augen tablet at the advertised price at a later date.

This high demand is exactly what Google (GOOG) wants.  Quantity.  More people browsing the web and viewing their ads in more places.  I’ll be honest: I don’t trust my toddler with an iPad but this thing will be great for watching Gumby (don’t ask) at home and Sesame Street in the car.  Besides watching Google’s YouTube Ads, I might do some web browsing as well.  You’re welcome Google.

It is also a great way to start out with Android for people curious about the platform but unwilling to sign up for a mobile plan.

This very well could be the first Android that functions as an ‘iPod touch for Android’, an important segment of the market that hasn’t yet been ‘touched’ by any of its hardware manufacturing partners.

Speaking of iPod, bargain hunters should also note that Apple does offer its base model (refurbished) iPod touch for $149 online. Obviously, you get a quarter of the display, but you do get the tidy Apple experience.

A VERY (almost NSFW) amateur video unboxing/review of the Augen Android tablet is below.

[youtube=http://www.youtube.com/watch?v=pfha5r6law0&w=600&h=375]