The iPad Killers Are Finally Coming

Let's not get too cocky, Cupertino.

It's certainly true that Apple's (Nasdaq: AAPL  ) iPad has been the undisputed champ in its space, downing more tablets than a bachelor party cracking open a Tylenol bottle after a Vegas bender. We've seen Tabs, Xooms, PlayBooks, and TouchPads come and go -- right into the clearance bin.

However, things are about to get interesting.

Attack of the booksellers
I was invited to attend an Amazon.com (Nasdaq: AMZN  ) press conference at Stage 37 in New York City come Wednesday morning. I can't make it. I'll be 1,285 miles away.

It's going to be a historic moment. There is little doubt about this being the introduction of Amazon's tablet.

"Stay tuned," was CEO Jeff Bezos' tease when asked about an Amazon-branded tablet five months ago. It will be a reality soon.

We also can't forget about Barnes & Noble (NYSE: BKS  ) . The meandering bookseller has a surprising hit with the Nook, with the company claiming a quarter of the e-reader market earlier this year. It's no Kindle, but it's clearly not a flop. Barnes & Noble's e-reader family may also be expecting. A source tells The Digital Reader blog that the bookstore chain is readying a more tablet-like gadget than its entry-level Nook and the more versatile Nook Color, to hit the market next month. The source is pricing the new Nook – code-named Acclaim -- at $349. Rumors have been placing the Amazon tablet in the same ballpark, and possibly as cheap as $299 for a seven-inch model.

Turning the page
There are plenty of nondescript Android-fueled tablets selling for less than the iPad's $499 starting point, but the more prolific releases haven't been able to price their gadgetry for less.

Well, at least not initially.

We already saw how Hewlett-Packard's (NYSE: HPQ  ) TouchPad sold briskly at $99, proving that pricing can be a game changer. Research In Motion (Nasdaq: RIMM  ) conceded earlier this month that PlayBook prices were likely to drop given sluggish sales.

Apple is selling more than two-thirds of the tablets in this country for a reason. When folks say that they want a tablet, what they're really saying is that they want an iPad 2. Despite Android's thriving smartphone presence and developer-friendly app marketplace, there's only one App Store.

HP and RIM tried to woo the gadget-hungry with differentiated operating systems, but that strategy turned out to be more of a liability than a marketing advantage. If readily available Android is struggling to make a dent against Apple's iOS, what kind of chance does webOS or QNX have?

However, let's not assume that price cuts will be the end of HP and RIM here. They can afford to subsidize the tablets at lower price points because they have already invested so much in the operating systems. We can't count either company out, until they truly bow out.

The next chapter for booksellers
It's not just HP and RIM that don't need to turn a profit on their tablets. Unlike most of the Android-peppered introductions over the past year and change, Amazon and Barnes & Noble have more than just the one-time sale of electronics to model in their pricing strategies.

Barnes & Noble knows that a more full-bodied Nook than its $249 Nook Color will translate into even more e-book and publication sales. We also can't forget that Barnes & Noble once owned GameStop (NYSE: GME  ) before spinning off the video game retailer several years ago. Back in April, GameStop revealed that it was exploring an entry into this niche with a gaming tablet. What if this $349 "Acclaim" device is the brainchild of both retailers? What if we're about to see a tablet that appeals to both gamers and bibliophiles?

We don't even need to guess when it comes to Amazon's advantages here. Nobody wanted an e-reader until Amazon devoted prime front-page real estate on its leading e-tail site for Kindle promotion. Amazon has also spent the past few years building up its digital vault when it comes to books, videos, music, and games. Armed with a proven and bountiful server farm, Amazon's been ramping up its cloud-computing platform and digital lockers. It is in a sweet position to eat into the unrest at Netflix (Nasdaq: NFLX  ) with its unlimited streaming of thousands of titles, made available to Prime loyalty shopping members at no additional cost. An Amazon tablet will be weak when it comes to apps, but it's going to be a beast in terms of portable multimedia. In short, an Amazon tablet will be in the best "move-in condition" that the industry has ever seen of any rollout.

Cheaper tablets? Differentiated offerings?

Check that swagger at the door, Cupertino.

If you want to see how the tablet wars play out heading into the holidays, consider adding Barnes & Noble, Amazon.com, or Apple to My Watchlist.

The Motley Fool owns shares of Apple, Research In Motion, and GameStop. Motley Fool newsletter services have recommended buying shares of Apple, Netflix, and Amazon.com. Motley Fool newsletter services have recommended writing covered calls in GameStop; creating a bull call spread position in Apple; and creating a bear put spread position in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for HP and Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (11) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On September 26, 2011, at 10:14 AM, foolindeed1 wrote:

    Oh, my - you said Nook from Barnes & Noble is no Kindle? You know what, you're absolutely right as current Nooks ( both of them) are light years BETTER than all Kindles.

    Nook Color tablet/ereader from Barnes & Noble has been on the market for a year and sold millions of units at $250. Gives Flash, apps, videos, web, eBooks and magazines subscriptions with video inserts, and the best anti-glare coated screen on the market. Technology "leader" Amazon finally decided to catch up with the book store company by copying it's device.

    Kindle only supports eBooks in its proprietary AZW format. Nook, on the other hand, supports both DRM-protected and DRM-free ebooks in ePub format thus it supports ebooks from B&N store, from any other DRM-free source on the web, and from public libraries. 

    If you walk in with the Nook to Barnes & Noble store, you’re allowed to read ANY available eBook for free while in the store via free provided in the store Wi-Fi. 

    There's over 2 million of paid books and about the same number of free public domain books in Nook eBook store.

     E-Ink Nook Simpletouch from Barnes & Noble has the latest generation touch screen display, no page turn lag, it weights less, its battery lasts twice as long (two months on one charge), and it doesn't blink on each page turn - much better than current Kindle 3 for the same price. Consumer Reports ranked Nook higher than Kindle while all major electronics reviews web sites like CNET, etc. declared Nook the best eReader on the market. Case closed.

  • Report this Comment On September 26, 2011, at 10:25 AM, xmmj wrote:

    Well, you may be right, but I think there is a real logical contradiction in your article.

    You say that Amazon will subsidize the price of its new tablet device through the sale of content. The you tell us how it gives away free streaming video with a $79 Prime membership. At that price, it must also be a loss leader.( Remember, the purpose of Prime is to provide free second day shipping, so is must also cover those costs.)

    So, somehow it is going to cover the loss of one with the loss of another? This does not make sense.

    OH, they will cover the cost by the sale of books, just like they do with the Kindle now. The problem here is that the current Kindle does nothing else besides read books. Anyone who buys one is bound to be a heavy reader. With a new general purpose tablet, the buyers will not be in that category. Only a small percentage of them will spend much money on books. And Android owners do not spend money on apps either.

    So how are they going to pay for the device? We know that the manufacture of tablets with similar specs to the iPad requires a selling price at least equal to that of the Apple tablet in order to make a profit. So, the new Android Kindle will have to cut the specs, or lose money.

    Even Amazon cannot do this for long.

  • Report this Comment On September 26, 2011, at 10:26 AM, H3D wrote:

    How many times have you written this same old article?

    It hasn't turned out to be even remotely credible, even once.

  • Report this Comment On September 26, 2011, at 10:27 AM, CascadeHead wrote:

    "We already saw how Hewlett-Packard's TouchPad sold briskly at $99, proving that pricing can be a game changer."

    Yes, pricing a $400 tablet at 75% and taking a huge loss can be a "game changer." Dumb dumb dumb dumb dumb.

    Did I mention you are dumb?

  • Report this Comment On September 26, 2011, at 11:32 AM, deemery wrote:

    Let's hold off predicting "iPad Killers" until we actually have SHIPPING PRODUCTS with SALES FIGURES, against the Apple product WHEN THESE ITEMS ACTUALLY ARRIVE.

    And then we can see if anyone else can sell these tablets at a profit.

  • Report this Comment On September 26, 2011, at 12:04 PM, DoctorLewis4 wrote:

    Apple has a lock on the tablet market. How many iPhone killer articles have we read?

  • Report this Comment On September 26, 2011, at 1:07 PM, NotTellinYou wrote:

    I am so bookmarking this article, along with all the others through the last two years, and let's talk again! :-)

    BTW: Why must everything be a "killer" to be seen as successful? Why have we all gotten into this all or nothing mode of thinking? Do we only have one car? One plane? One TV? The very idea seems just as fanciful as this article!

  • Report this Comment On September 26, 2011, at 1:48 PM, tmanrap wrote:

    I don't have any planes. If you have an extra one you could give me, that would be killer.

  • Report this Comment On September 26, 2011, at 2:44 PM, shaddavid wrote:

    The current Nook color is a legitimate tablet contender. The real price is $179.00 from Barnes and Nobels' ebay store.

    "It's no kindle" says that author. No. That is why I purchased one.

    You can run the basic Android on it if you wish from a SD memory card or you can just use the BN version of Android which works very well for email and web browsing.

    I had no intention of buying a Nook to read books, but rather to have a small form iPad for $180. But I also discovered that I love to read on it as well.

    Why do most bloggers and magazine authors ignore the Nook while thinking that Amazon is coming out with something "new"?

    Check out the Nook Color at your local Walmart and then go to ebay for the less expensive version.

  • Report this Comment On September 26, 2011, at 3:48 PM, jerryballew wrote:

    Hold the presses, shelve the shadenfreude, there is no iPad killer on the market, so this gleeful Apple diminisher harps on and on and on. This is a throwback to approximately 14 years ago when Apple was in its doldrums and last legs, and Bill Gates generously loaned Apple over a hundred million dollars to keep on going and doing its extensive Research and Development. Smart move of Bill. It was cheaper to loan Apple money so he could steal Apples innovation than to fork over the dough for his own R&D and "innovation." Apple was snarked by PC "mavens" as a lost cause. So now here we are years later with Apple the biggest corporation through its innovation still getting snarked by little scumbags still calling for the "downfall" of Apple. Go stuff it, son.

  • Report this Comment On September 26, 2011, at 4:29 PM, carla01j wrote:

    Ahh, you're comparing apples and cherries. At 299, the Kindle will be less than half the price of an iPad, but will have half of the screen area. When you go to a Chevy dealer, you can get an Aveo much cheaper that a Tahoe; please explain why Tahoe outsells Aveo.

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