Best Buy's Worst Idea Yet

Big-box retailer Best Buy (NYSE: BBY  ) has run out of good ideas. Might as well start busting out the bad ones. The worst one yet is that the company is now planning on launching a tablet just in time for the holidays.

Best Buy has teased images of its upcoming Insignia Flex tablet on its Facebook fan page, but has declined to share more relevant details regarding pricing or detailed specs. The company has said it will feature a 9.7-inch display, a dual-core 1 GHz processor, and run on Google (Nasdaq: GOOG  ) Android 4.0 Ice Cream Sandwich. Best Buy also said it will hit store shelves on Nov. 11.

Source: Best Buy.

This is where Reuters comes in, reporting that the device will retail between $239 and $259. That sounds like a pretty aggressive price for a full-sized tablet. On one hand, it's smart not to challenge Apple's (Nasdaq: AAPL  ) iPad directly at $499 or even the older iPad 2 at $399, but on the other hand, consumers will end up getting what they pay for: low-quality hardware. After all, low-end offerings are exactly what Best Buy's in-house Insignia brand is known for.

Those price points will compete more directly with Amazon.com's (Nasdaq: AMZN  ) Kindle Fire family and Google's own Nexus 7. Amazon's upcoming 8.9-inch Kindle Fire HD that launches at the end of November starts at just $299.

Best Buy will continue selling gear from its rivals though, simply offering its own device as another option in its tablet arsenal. That's a different approach than other retailers though. Both Wal-Mart and Target have stopped selling Kindles in the face of escalating competition from Amazon.

Consumers will still be able to head to a local Best Buy if they're looking for a tablet fix, but chances are they won't be buying Best Buy's.

The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors that understand the landscape. You can read about the "3 Companies Ready To Rule Retail" in our premium research report. Uncovering these top picks is free today. Just click here to read more.

Evan Niu, CFA, owns shares of Apple. The Motley Fool owns shares of Apple, Amazon.com, Best Buy, Facebook, and Google and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Amazon.com, Apple, Facebook, and Google. 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.


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