Published September 26, 2012
Barnes & Noble Inc (BKS) took a shot at archrival Amazon.com on Wednesday, unveiling its own lighter and thinner hi-definition tablets that can accommodate multiple users in a bid to win a bigger share of the exploding tablet market.
The largest U.S. bookstore chain 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, similar in size to Apple Inc's (AAPL) market-leading iPad, with 32 GB of memory. IPad prices are roughly twice as high for similar devices.
The new Nooks are the latest entrants in the fight for sales of tablets and e-readers - and the digital content like books, movies and magazines that goes with them. Barnes & Noble has staked its future on its digital business as the company faces an overall industrywide drop in the sales of physical books.
"A key growth area is to get their existing customer base onto the digital platform,'' Forrester Research analyst Sarah Rotman Epps told Reuters, saying the new devices were competitive with similar products by Amazon in terms of features and pricing.
Barnes & Noble faces formidable competition from Amazon, which can use its Prime shipping service and amazon.com site to draw users to its Kindle tablets, and Apple, which has sold tens of millions of iPads.
To keep pace, Barnes & Noble added innovative features that would allow each a family to share a Nook tablet, with each user able to create a home page and customize preferences, the first table to do so. There are also parental controls that can prevent kids from reading ``Fifty Shades of Grey'' or go shopping on the digital store.
The company is also launching a new video-streaming and download service for Nook, narrowing the gap with Amazon and Apple, which offer more content on their devices. At a media event in Manhattan on Tuesday, officials said the company had emphasized features such as image resolution and page-turning technology given the needs of its basic customers, book and magazine readers.
"We are playing in the tablet space, but reading is at our core,'' Barnes & Noble Chief Executive William Lynch told Reuters in an interview on Tuesday. The 7-inch tablet weighs 11.1 ounces. Its larger sibling is 18.2 ounces, making it lighter than the iPad and making them both more appropriate for reading, he added. The iPad weighs about 23 ounces. The top U.S. bookstore chain launched its first Nook device, a basic e-reader, in 2009 and has held its own with deep-pocketed rivals Amazon, Apple and Google Inc. That success has allowed it to garner as much as 30 percent of the U.S. electronic-books market.
Barnes & Noble's new devices, available for pre-order on Wednesday, will ship in October and be in U.S. stores in November. They will be on sale in Britain beginning in late November at chains including Sainsbury's and Waitrose. Shares of Barnes & Noble rose 1.9 percent to $12.49 in early New York Stock Exchange trading. On Nasdaq, Amazon dipped 0.3%, while Apple fell 1.7%.
BRUISING PRICE WARS
The tablet market is among the fastest-growing sectors of the technology industry. Research firm Gartner forecasts that sales will almost double this year, to 118.9 million units. Barnes & Noble's latest Nooks will appear in its nearly 700 stores as well as chains Best Buy Co Inc, Target Corp and Wal-Mart Stores Inc. Target and Wal-Mart have decided to no longer carry Amazon's Kindles, giving the
Nook an edge at thousands of retail locations.
Amazon.com Inc earlier this month unveiled its own HD tablets. It launched its first last year and says it has a 22% share of the U.S. market. With the new Nooks, Barnes & Noble is also taking aim at
Apple, whose iPad is far more expensive, because there is room in the market for a strong tablet at a lower price, Lynch said. Questions about the Nook's long-term viability arose last month after Barnes & Noble reported that Nook revenue including books last quarter was up only 0.3%, hurt by price decreases early in the summer. That has added urgency to developing new products.
Price wars with Amazon have been bruising, but Lynch was undismayed: ``We're growing the digital content portion of the business, and that's where we envision making our economics,'' Lynch said.
Last quarter, Barnes & Noble lost business when it didn't have enough Nook devices that allow for reading in the dark. Lynch said the company is now producing HD tablets in numbers sufficient to meet what it expects will be strong demand during the holiday period.
"We believe we'll gain significant share in the tablet category, and we've planned for that from a production standpoint. I believe these are going to be hot holiday gifts.''