Did Barnes & Noble Just Become Much More Dangerous to Apple and Amazon?
Barnes & Noble (NYSE:BKS) upped its game on Wednesday, unveiling its own lighter and thinner high-definition tablets at half the price of Apple’s (NASDAQ:AAPL) iPad, and with features and pricing similar to Amazon’s (NASDAQ:AMZN) Kindle Fire. Just in time for the crucial holiday shopping season — the new Nook tablets go on pre-sale today and ship in October — Barnes & Noble will also be taking its Nooks across the pond, where they will debut in November at U.K. chains including Sainsbury’s and Waitrose.
B&N introduced the new devices with price tags ranging from $199 for a 7-inch Nook HD tablet with 8 gigabytes of memory, to $299 for a 9-inch Nook HD+ tablet with 32 gigabytes of memory. Amazon’s cheapest Kindle Fire tablet is 7 inches with 16 gigabytes of memory, and sells at the same price as the lower-end Nook HD. The Nook HD+ is more comparable in size to Amazon’s Kindle Fire HD 8.9″, the 16 gigabyte version of which sells for $299 as well. Both are priced well below Apple’s most basic third-generation iPad, which at 9.7 inches and 16 gigabytes goes for $499. However, with the introduction of the new iPad in March, Apple lowered the price on the iPad 2, making the 16 gigabyte, Wi-Fi only version just $399.
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The new Nooks are certainly better set up to compete with Amazon than Apple, given their features and pricing, but that’s enough for Barnes & Noble, which doesn’t just rely on revenue from device sales, but from the digital content like books, movies, and magazines that goes with them. Amazon, which can use its Prime shipping service and Amazon.com site to draw users, has been formidable competition in that arena.
To give it an edge, Barnes & Noble has added innovative new features that allow families to share a single Nook tablet, with each user able to create a home page and customize preferences. It has also included parental controls that can prevent children from reading more adult content or from shopping in the digital store.
B&N is also launching a new video-streaming and download service for Nook to better play in the tablet space, but will not lose the features that make it a desirable e-reader. The 7-inch tablet weighs 11.1 ounces, while the 9-inch version weighs 18.2 ounces. Both are lighter than the iPad, which weighs about 23 ounces, making them better suited for reading.
The Nook currently controls roughly 30 percent of the U.S. electronic books market. If Barnes & Noble can gain a foothold in the U.K. as it launches there this fall, it could add significantly to its revenues in the under-saturated market — Amazon only recently began selling its tablets there. The new devices might also help Barnes & Noble gain a stronger foothold at home. It will appear in its nearly 700 stores as well as chains Best Buy (NYSE:BBY), Target (NYSE:TGT), and Wal-Mart Stores (NYSE:WMT). Target and Wal-Mart recently decided to no longer carry Amazon’s Kindles, giving the Nook an edge at thousands of retail locations around the country.
Barnes & Noble shares are down over 15 percent this year to date as analysts and investors question whether the Nook has long-term viability. In the last quarter, B&N reported that Nook revenue, including e-books, was up only 0.3 percent, hurt by price decreases earlier in the summer, which added urgency to B&N’s development of new products.
Last month, when the company didn’t have enough of its new glow-in-the-dark Nook devices to meet demand, it lost business. This time around, CEO William Lynch says the company is producing HD tablets in numbers sufficient to meet what it expects will be very strong demand during the holiday quarter.