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Will This Tablet Be a Touchdown?

The following video is part of our "Motley Fool Conversations" series, in which Motley Fool analysts Austin Smith and Andrew Tonner discuss emerging trends in their favorite companies.

In today's edition, Austin and Andrew discuss a bold move by a classic company trying to transition into a new tech era. But standing in the way is a 300-pound gorilla that has deeper pockets and a better device and is willing to take a loss on its product to keep other companies out. This attempt to modernize has to be admired, but it ultimately spells impending doom as the bricks and mortar of these companies' businesses will end up acting like an anchor.

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The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

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Austin Smith and Andrew Tonner own no shares of the companies mentioned above. Motley Fool newsletter services have recommended buying shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 24, 2011, at 9:31 PM, avengergirl2010 wrote:

    This has got to be the most bogus reporting from two people I have ever seen first of all BN was not in the financial situation Borders was in where they were owing publisher millions as one of their main investors. Secondly BN created their own device and borders did no such thing. Lastly this kind of reporting only shows that you both never go or been in a BN store or you would clearly notice the lines of peope buying stuff BN adding new content like a Toys and Games department, Some stores actually selling video games and others with mac stations for kids. Next time you decide to do reporting on a company like this make sure you go into a store and see the action before trying to assume you know what will happen to the company when you clearly don't.. Piss poor reporting. I guess that is where the name "fool" comes from your lack of investigating. Fools all around!!!

  • Report this Comment On November 24, 2011, at 10:27 PM, cybrosia wrote:

    After months and one biased pro-Amazon/anti-BN report after another, I finally have to ask - How much is Amazon paying you guys? Are you even close to being aware of the number of problems already being reported with the Kindle Fire? Apparently not or you would not keep harping on the "better user experience." An extremely biased, uninformed and unprofessional report. However, I'm sure Amazon is very happy with such reporting from you.

  • Report this Comment On November 25, 2011, at 8:10 AM, CHUCK423 wrote:

    Last quarter Amazon earned 63 million on gross sales of 10 billion. P/E at 92. Does this sound like a 800 lb gorilla? More like a 20lb Chimp.

  • Report this Comment On November 25, 2011, at 9:12 AM, TMFBWItime wrote:

    The Kindle Fire is expected to sell 6 million units this quarter according to Cnet. Forrester research estimates that the Kindle Fire will sell 5 million for the same period. Their estimate for the nook is that it could hit 2 million.

    Amazon should not be dismissed as a threat to Barnes and Noble's tablet goals. While Amazon's aluation is high, they have shown that they have the willingness (and cash) to build a product they take a small loss on, and will wait a long time for it to pay off. Barnes and Noble can not afford to match that strategy.

    Regardless of how you feel about how expensive one stock is compared to another, Amazon is surely disrupting, and will continue to disrupt, sales of B&N's nook devices.

  • Report this Comment On November 25, 2011, at 9:26 AM, TMFBWItime wrote:

    *valuation

  • Report this Comment On November 25, 2011, at 3:53 PM, FoolsAreTools wrote:

    This seems more like Amazon fan boy chatter than rigorous analysis. It's unsurprising that a couple of young males are talking up internet shopping and Amazon for the 100th time on Fool.com. Young males are the demographic most likely to hate physical store shopping and love internet shopping. Note to Amazon fan boys: Most of the world is not like you.

    B&N knows the book market (publishers and consumers) far better than Amazon. B&N is successfully winning over the best demographic for book shopping--WOMEN--who generally prefer books-oriented B&N to the internet's version of K-Mart. (I almost said Wal-Mart, but that would be an insult to a business that has always been far superior to Amazon.)

    The Kindle Fire's status as this year's hot holiday toy will change. It won't be long before it becomes a closet stuffer, as the product is essentially a klunky shopping cart for Amazon.

    Bottom line, only true believers and quick traders are buying Amazon stock anymore, as the ludicrous stock price means Amazon stock will likely underperform substantially the broader market and BKS.

  • Report this Comment On November 25, 2011, at 4:58 PM, foolindeed1 wrote:

    As users start getting their Kindles, a lot of further flaws are cropping up. The most serious one turns out to be that the Kindle is activated to allow for 1-Click shopping through the account connected to the device, and such behavior cannot be turned off. Additionally the device asks for no confirmation password before validating the purchase, which means that if anyone gets hold of the device, he can purchase things at will, potentially bankrupting the owner.

    Other less serious flaws have been reported as well, namely:

    It runs hot;

    The stereo speakers are both on top of the device, which means that when watching movies they are both on the same side, turning them into mono sound;

    Slower and jerkier than expected web browsing – no benefit from Silk;

    Just 6.5Gb storage free at startup;

    Prime movies can’t be downloaded, only streamed, making them impossible to watch without wifi;

    Several defective units being reported;

    The carousel shows everything you ever bought and every site you visited, with no way to delete items, which means compromising items you bought or sites you visited can’t be removed. There goes your privacy;

    Touchscreen being reported as having a sluggish response, lack of physical back button and virtual back button being sluggish and not always at the same place;

    When the internet browser is pointed at the Android market, it reverts to the Amazon market;

    Power cord is too short to be able to use device at the same time as it charges;

    Power button is badly placed, leading to accidental turning off of the device;

    Wifi connection problems are being frequently reported;

    Does not support proxy servers, making it difficult to connect to the internet outside the home environment;

    Does not support ad-hoc connections so you can't use the 3G connection from your phone with tethering.

  • Report this Comment On November 25, 2011, at 4:59 PM, foolindeed1 wrote:

    Kindle Fire vs. Nook Tablet reviews:

    PCWORLD:

    The Nook Tablet’s unique display has less reflectivity than the Kindle Fire’s, and so is easier to read. In addition, some fonts and videos render more sharply on it than on the Fire. The dual-core 1GHz Texas Instruments OMAP 4 CPU and 1GB of RAM made switching from app to app a breeze, with little lag or stuttering. Movies played smoothly and stutter-free in Netflix, and the high-definition images re-rendered for Nook’s 1024-by-600-pixel display looked lovely, with terrific contrast.

    The Nook Tablet’s display was dazzling overall. The screen’s glare was minimal, thanks to what Barnes & Noble calls its VividView display. The IPS display is laminated and bonded; so unlike on other tablets’s displays–including the Kindle Fire’s–there’s no annoying, visible air gap between the glass screen and the LCD beneath.

    CNET:

    We streamed Netflix side by side with the Kindle Fire, and head-to-head comparisons were very favorable to the Nook–it simply looked better. Both tablets have the same app, but the Nook Tablet’s picture looked more vivid and detailed. The Nook Tablet also has physical volume controls on the side, which come in handy–the Kindle Fire strangely lacks them. The screen, which is a higher-quality IPS display than the Kindle Fire, really shows off Netflix and Hulu Plus to amazing effect… It’s the best screen on a budget tablet that I’ve ever seen. More storage–both onboard (16GB) and via microSD expansion–and the ability to read EPUB files could be big news for those who want flexibility. There’s plenty of expansion room, and you’ll have a hard time running out of space for your apps or your magazine downloads.

    Bloomberg:

    Barnes & Noble’s one-year head start in developing software really shows: scrolling is smoother, the screen reorients itself faster and the device just generally feels zippier.

  • Report this Comment On November 25, 2011, at 5:00 PM, foolindeed1 wrote:

    How do you access Cloud on Wi-Fi-only Kindle Fire when traveling and when no Wi-Fi is available? Cloud is a big myth, you can only count on your Wi-Fi-only device for content storage. Kindle Fire only has 6 GB to use after space is taken by Android OS and it doesn't have any expandable card slot.

  • Report this Comment On November 25, 2011, at 5:01 PM, foolindeed1 wrote:

    There are a lot users complains on the web about Kindle Fire faulty Wi-Fi thus users have issues connecting to Internet. All pro reviewers on the web noted that Kindle Fire's performance is significantly worse than Nook Tablet from Barnes & Noble.  Amazon's own web site has hundreds of reviews of Kindle Fire's new owners that gave it 1 or 2 star reviews because of its choppy/laggy experience with this underpowered device.  

  • Report this Comment On November 25, 2011, at 5:13 PM, foolindeed1 wrote:

    Pandora you say? Ypu're forgetting that Kindle Fire ia not a phone and no 3G on it, Wi-Fi only. Does your minivan have Wi-Fi? Or commuting train or bus. Pandora my ....

  • Report this Comment On November 27, 2011, at 7:25 AM, TMFBWItime wrote:

    @FoolsAreTools

    Regarding your comment about most people not taking to online shopping:

    a shop.org survey indicates 68% of retailers expect online shopping to surge at least 15% this holiday season.

    The national retail federation expects shoppers to spend 36% of their holiday purchases online this year.

    Online shopping jumped more than 24% on Black Friday according to IBM. This is following last year's already massive online sales figures.

  • Report this Comment On November 27, 2011, at 9:20 PM, Melaschasm wrote:

    As an avid reader, I find internet shopping to be a superior experience.

    Not only is the selection far larger, but it is easier to search for books by title, author, subject, or even genre. By the time I drive to the huge B&N in town, I would have already completed my purchase and read a few chapters of my current novel. As an added bonus, I can read reviews of the books, see what other people with similar tastes like, and save money at the same time.

  • Report this Comment On November 28, 2011, at 4:04 AM, savvymike1 wrote:

    As far as the Fire is concerned two-thirds of reviews are positive, and many of the negative reviews appear related to not understanding the specs...The legitimate concerns will most likely be addressed in future models.

    The only question to me is whether or not Barnes and Nobles could survive without a digital strategy? I'm not sure. They put their competitors out of business by amassing scale and offering steep discounts, and they are ultimately facing the same challenge from Amazon. Considering the roughly 100 to 1 size disadvantage in market cap and outdated business model, it will be interesting to see if Barnes and Nobles survives...

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