Another Shot Fired in the Tablet Price War
Aug 13th 2012 9:30AM
Updated Aug 13th 2012 9:38AM
Barnes & Noble (NYS: BKS) isn't going to bow out of the e-reader and tablet markets without a fight.
The struggling bookseller cut prices of its tablet-like e-readers over the weekend.
The $169 Nook Color can now be had for $149. The 8-gigabyte Nook Tablet -- the closest match to Amazon.com's (NAS: AMZN) Kindle Fire -- is now cheaper after a $20 haircut to $179. The 16-gig model is going from $249 to $199.
There could be many reasons for the move.
- Barnes & Noble may have new hardware coming out, and this is a way to clear out inventory.
- Amazon is rumored to be nearing a release for an updated Kindle Fire, and that may accompany a price cut for the original model.
- Last month's release of Google's (NAS: GOOG) Nexus 7 at $199 disrupted the market with superior specs to the Nook Tablet and Kindle Fire.
Barnes & Noble has always had the advantage of its physical stores and its reputation with bibliophiles, but loyalty isn't blind to the rapidly evolving marketplace. The Nexus 7 and growing chatter that Apple (NAS: AAPL) is going to dive into the entry-level market with its own 7-inch tablet requires that both Barnes & Noble and Amazon keep their gadgets aggressively priced.
Barnes & Noble didn't have the flexibility that Amazon has had over the past year in sacrificing near-term margins for the sake of market share, but the company got a surprising boost earlier this year when Microsoft (NAS: MSFT) made a substantial investment in the retailer's money-losing Nook business.
Saving $20 or $50 on a gadget may not seem like much, but there's a definite advantage of being the cheapest option in a marketplace of cheap people.
Your move, Amazon.
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The article Another Shot Fired in the Tablet Price War originally appeared on Fool.com.The Motley Fool owns shares of Apple, Amazon.com, Google, and Microsoft. Motley Fool newsletter services have recommended buying shares of Apple, Google, Microsoft, and Amazon.com. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Motley Fool newsletter services have recommended writing puts on Barnes & Noble. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. Longtime Fool contributor Rick Munarriz does not own shares in any of the other stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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