Gigaom

Behind Amazon's and B&N’s Tablet Strategy


Barnes & Noble (BKS) is holding a press event on Nov. 7, when it is expected to launch a successor to its popular Nook Color. Details and specifications of the new Nook Tablet have already leaked to the Web: The 7-inch slate gains performance, loses weight, and bears the same $249 price as the prior model. It’s too bad that other tablet-makers aren’t taking a cue from Barnes & Noble, as well as from Amazon (AMZN) and its Kindle Fire tablet: Simplicity and reasonable prices, not specs, will win the tablet wars.

Both Amazon’s and Barnes & Noble’s tablets share this idea of simplicity and relatively low cost, with each priced far below the typical $499 entry point for a larger tablet. Neither is meant to handle some of the heavier, computer-like tasks that their bigger brethren address. While some consumers have used iPads or Android tablets to replace some—in a few extreme cases, all—of the functions of a laptop, neither the Fire nor the Nook can replace a computer.

This allows both companies to focus on providing a great experience for the functions that consumers most want: reading digital media, browsing the Web, consuming video content, checking e-mail, and running a handful of popular applications found in curated application stores. Think of the controlled Apple (AAPL) iPad experience in a cheaper, smaller form.

I say “controlled” because although both the Fire and Nook are built on the Android platform from Google (GOOG), both have a custom interface that completely hides any of Android’s warts. Each has its own third-party app store filled with compatible Android apps, but the apps are chosen by Amazon and Barnes & Noble, eliminating tens of thousands of marginal software titles. Also eliminated is a lengthy carrier contract: Both devices are Wi-Fi only and lack mobile-broadband radio, so there’s no contract or monthly fee for 3G or 4G service.

Lower Prices, No Contracts

Contrast these tablets’ approach with the array of iPad competitors from Samsung, Motorola Mobility (MMI), HTC, and others—most of which cost far more. Yes, many Android tablets are similar in size to the iPad, if not larger, but Samsung and HTC each offer a 7-in. slate as well. I bought a 7-in. Galaxy Tab last December for $300—$100 more than the Fire and $50 more than the new Nook, It came with a contract for the 3G radio, which has cost me an additional $40 per month. I gain mobility because the device is connectible anywhere, but it’s not always worth $40 on a monthly basis.

The traditional computing companies that are making tablets have embraced a computing-centric approach. The devices are often marketed more via specifications than on the experience the devices can provide. Throwing more hardware inside a tablet doesn’t guarantee a bestseller. A focused ecosystem with digital content, paired with inexpensive yet capable hardware, is likely a better recipe for success. Both newcomers to the tablet market have content; the computer-makers don’t.

Even from a strict hardware perspective, Barnes & Noble has outmaneuvered the traditional computer makers when it comes to tablets. If the leaked Nook Tablet specs are accurate, the $249 device has a dual-core processor, 16 GB of memory with an SD card expansion port, a 7-in. display with 1024 x 600 resolution, and an expected battery life of eight hours. Compared to Samsung’s new Galaxy Tab 7.0 Plus, now available on Amazon for $399, it offers a near-mirror image of specifications, yet costs $150 less.

It all amounts to another lesson for the traditional hardware-makers: You can sell your hardware at cost—or even at a loss—if you can also sell profitable content to make up the difference.

Priced for Impulse Buying and Gifts

Barnes & Noble essentially created the beginnings of a second tablet market last year , when it released the original Nook Color. This holiday season, the market expands with a $199 Kindle Fire and the new $249 Nook Tablet. The price for the original, still-capable Nook Color is expected to drop to $199. At this range, the smaller slates grow closer to becoming impulse purchases and are surely good candidates to become top-selling holiday gifts. The same can’t be said of larger tablets that cost at least twice as much.

Surprisingly, it took two bookselling digital-content companies to figure out that there’s a market for smaller, less-expensive tablets that focus on key consumer activities. The Fire and Nook may not replace computers. For most people, neither does the iPad—yet it’s easily outselling comparable Android tablets by a large margin, according to the limited data available.

It’s almost a shame that the computer-makers didn’t see what we saw more than a year ago: Building a solid, inexpensive tablet that does a few desirable things very well may be a better strategy to sell a tablet that isn’t called iPad.

Also from GigaOM:

Tablet Wars: Apple Is From Venus, Amazon Is From Mars (subscription required)

General Motors Deal Would Be Huge Coup for Google Apps

Samsung’s EU Patent Strategy Could Lead to Apple Win

First Solar: Boosting Production Is a Bad Idea

CBS Turned Down an Ad-Based Apple TV Deal

Tofel is a writer for the GigaOm Network.

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Companies Mentioned

  • BKS
    (Barnes & Noble Inc)
    • $23.46 USD
    • 0.38
    • 1.62%
  • AMZN
    (Amazon.com Inc)
    • $303.03 USD
    • -3.25
    • -1.07%
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