Please ensure Javascript is enabled for purposes of website accessibility

A Walmart Tablet Is Another Battle in Its War With Amazon

By Daniel B. Kline – Updated Apr 14, 2019 at 1:53PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

You have to wonder why the retailer waited so long.

Walmart (WMT -1.33%) only has one real competitor. The retail chain is in a battle with Amazon (AMZN -8.43%) for dominance, and it now plans to take the fight to another frontier that it had previously ceded to its digital-first rival.

The brick-and-mortar retailer with a fast-growing digital and omnichannel presence plans to introduce a low-cost tablet under its ONN house brand, Bloomberg first reported. An Android-powered device, the tablet will be made by a Chinese supplier, according to photos found on a database of wireless product applications filed with the U.S. Federal Communications Commission. 

It's an unspectacular-looking tablet that has the same form factor as dozens of other off-brand Android tablets. The difference is that Walmart can follow Amazon's model and use its tablet as an inexpensive way to keep customers in its ecosystem.

A couple looks at a tablet while sitting in front of a TV

Walmart plans to offer its own tablet. Image source: Getty Images.

The Fire model

When Amazon introduced its Kindle Fire tablets in 2011, they were much cheaper than the market-leading Apple (AAPL 2.44%) iPad. The iPad was a sleek piece of top-tier technology that looked like a device that came from a science-fiction film. It was priced accordingly, starting at $499 for the basic 16GB model.

Kindle Fire was intentionally less sleek. It wasn't meant to be a direct iPad competitor. Instead, it launched at $199, and it wasn't long before $99 models were available (even cheaper versions are offered now). The Fire was an attempt to put tablets in more hands, and more importantly, it was a way to put Amazon's various stores in front of more customers.

Walmart isn't going to break any ground by offering an inexpensive, kid-friendly tablet. It already has lots of cheap Android tablets on its shelves, and a self-branded one isn't likely to be all that different -- with one notable exception. The retail giant can follow Amazon's model and make sure that its ONN tablet puts Walmart's services and stores front and center.

On a Kindle Fire, Amazon controls the entertainment and app stores. If you rent a movie, the company gets a cut. The same is true if you pay for an app or buy a movie, television show, or album. Amazon, of course, also makes it easy to use its tablets to shop from Amazon.com, making each one sold an extension of its sales platform.

There's no reason Walmart can't do the same thing. Its tablets can be loaded with a Walmart-heavy Android installation. That should allow it to offer a branded entertainment store and lead tablet owners to shop on Walmart.com.

Check out the latest earnings call transcripts for Walmart, Amazon, and Apple.

Why did this take so long?

When Amazon launched Fire, it was breaking new ground. That ground has now been well-traveled, and cheap Android tablets can be bought at convenience stores and pharmacy chains. The technology for Walmart to easily do this has been around for years, and clearly, waiting has almost certainly lost the chain some potential customers.

Still, Walmart has a huge customer base, and it can sell tablets cheaply as a way to extend its ecosystem. This move should have happened sooner, but that doesn't make it any less smart now. By offering this tablet (a move Walmart has confirmed but not offered any details on), the retailer can serve its core customers and extend its reach into their homes.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel B. Kline owns shares of Apple. The Motley Fool owns shares of and recommends Amazon and Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.