Barnes & Noble Plan Onslaught of the Tablets Market

on Sep 27, 2012
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On Wednesday 26 September Barnes & Noble (NYSE:BKS), the world’s biggest book store chain, revealed its first high-definition tablets, which are meant to take on rivals from Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL). The Nook HD with a 7-inch screen will sell for £159 and will battle Amazon’s Kindle Fire and Google’s Nexus 7. The upper-end tablet is Nook HD+ with a 9-inch display for the price of £229, which will compete with Apple’s iPad.

According to Barnes & Noble its new tablets are lighter, more powerful and with a better display compared to what is offered on the market. “We’ve taken our bookselling heritage and put that understanding into our products,” said Jamie Iannone, the Barnes & Noble president of digital products, as quoted by The Times.
The company has already secured distribution deals and the tablets are expected to be on sale in late November at chains including Waitrose and Sainsbury’s. B&N will enter into a Christmas sales war with Amazon, which will also be making a November debut in the UK with its 7 and 8.9 inch Fire HD.

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B&N managed to accumulate some much needed investment with Microsoft recently taking a $605 million stake in their Nook business, giving the book seller enough financial firepower to expand into the tablets market. The company is still considered an underdog as it faces the daunting task of entering into a highly competitive sector.
*”Barnes & Noble is the smallest player trying to do the software and the hardware development, and they don’t have the financial means beyond what Microsoft has already fronted them to keep up in the arms race,”* said Peter Wahlstorm, Morningstar analyst.

B&N is putting plenty of money and effort into capturing a larger share of the e-book readers market in the US. For now Amazon’s Kindle is the leader with 60 percent share while the Nook is fiercely chasing it with around 30 percent. The race has proven to be expensive and, so far, unprofitable for B&N. In the second quarter the book seller reported lower Nook sales compared to previous quarters, a consequence of Amazon’s aggressive price cutting. Despite the difficulties, William Lynch, B&N chief executive, believes that the Nook devices are essential to helping it generate sales of its digital content. *”We’re growing the digital content portion of the business, and that’s where we envision making our economics,”* said Mr Lynch for Reuters on Tuesday.

By the end of the year Microsoft will also have its own tablet out in the market – Surface. The device will run on Windows 8, the latest version of the operating system and will feature two types of covers – touch and type. The tablet is meant to compete with the iPad but it is as yet unclear whether Microsoft is going to try to undercut the competition.

According to surveys one in four tablet owners now say that their slate has become their primary computer. It is a tremendous change keeping in mind that before 2010 and Apple’s iPad, tablets were unknown to homes or businesses. The adoption rate has been so rapid that in 18 months 11 percent of US households own a tablet – this technology has spread faster than any other in history.
Companies like Barnes & Noble are taking a brave step in entering the tablets’ business and hopefully they will be able to provide some variety and meaningful choice to the consumer base. Investors certainly approved of the book seller’s decision and shares rose by 5.95 percent to $12.99.

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