Will Gamer Tablets Be iPad Killers?

Diehard gamers can't say that they didn't see this coming.

GameStop (NYSE: GME  ) is throwing its weight behind tablets as gaming devices. Tech blog Engadget is reporting that 200 of the chain's 6,582 stores are starting to sell a few gamer-centric Android tablets in a soft launch ahead of the telltale holiday shopping season.

Again, no one's surprised.

GameStop President Tony Bartel told gaming news site Gamasutra back in April that he was working with the retailer's software partners and tablet manufacturers to see if they can crank out a Bluetooth-friendly device that hardcore gamers can get excite about.

"If we can't find one that's great for gaming, then we will create our own," he said at the time.

The small-box video game retailer began accepting Apple (Nasdaq: AAPL  ) iPads -- as well as iPods and iPhones -- as trade-ins for store credit this summer. Reports out of a Vegas trade show at the time had GameStop preparing to stock the iPad.

Well, the extreme chatter has yet to materialize. GameStop is thankfully not rolling out its own branded tablet in a market where everything outside of the iPad has failed. Why reinvent the flat tire? The iPad is also absent from GameStop's soft launch.

GameStop is actually taking a smart approach here. It's offering some of the existing Google (Nasdaq: GOOG  ) Android gadgetry -- including Acer's Iconia and Samsung's Galaxy Tab -- but bundling it with several high-end Android games. Selling the tablets at the same retail prices as the non-bundled tablets found elsewhere should give GameStop a marketing advantage this season.

Sure, it's a tiny sliver of the market that isn't going for the iPad. Amazon.com's (Nasdaq: AMZN  ) Kindle Fire is also going to eat into this market in two weeks. However, at least GameStop got it right. Slapping its name on a doomed tablet would've nuked its brand.

Naturally this isn't where GameStop would like to be. Despite its recent digital gaming acquisitions, GameStop stands to lose plenty if gamers take to tablets over smaller handheld gaming devices. Tablets mean digital delivery of free or nearly free games, closing GameStop out of the sale and resale that make its model purr. However, GameStop may as well address the shifting marketplace to make sure that it remains relevant. The staggering 9.1% decline in comparable-store sales in its most recent quarter is too loud to ignore. Too many other companies have let pride lead to their obsolescence. GameStop doesn't want to be next.

Add GameStop to My Watchlist to see how this move plays out.

The Motley Fool owns shares of GameStop, Google, and Apple. Motley Fool newsletter services have recommended buying shares of Amazon.com, Apple, and Google; creating a bull call spread position in Apple; and writing covered calls in GameStop. 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. 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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  • Report this Comment On November 02, 2011, at 5:21 PM, Varchild2008 wrote:

    I wonder if the joysticks Gamestop made for these tablets works for these tablets regardless if you bought the Gamestop version?

    I mean there could be a market out there for these joysticks regardless of how the tablets sell, if the joysticks work for the Samsung Galaxy Tab 10.1 no matter where you bought it.

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