As predicted, Barnes & Noble introduced a $249 Nook Tablet that has about double the memory and internal storage of the upcoming $199 Amazon Kindle Fire.
The Nook Tablet and the Kindle Fire are "very different products, but the critical break-point is $199, and $249 [for the Nook Tablet] does not have that same cachet with buyers," said Rob Enderle, an analyst at Enderle Group. "Below $200 is a much bigger market than $249, and Barnes & Noble is missing the break-point that's going to be the critical factor in sales, not specs."
Enderle's reasoning is based on consumer technology sales history and how shoppers buy during the holiday season. While a person buying for himself might weigh more carefully the superior memory and storage of the Nook Tablet, that same buyer would want to hold down the cost below $200 when buying one as a gift, he said.
Jack Gold, an analyst at J. Gold Associates, said the $50 difference could weigh against Barnes & Noble because "most buyers aren't crazy techies and won't go through every spec like I would ... For most users, the extra memory won't be that important."
IDC analyst Tom Mainelli said it is hard to predict how important the $50 price difference will be, but added that the customers Barnes & Noble is going after are "likely not that specification-driven."
Barnes & Noble also claimed the Nook has a better screen than the Kindle Fire, "but that's one of those things that you'll need to compare side by side." Both devices have a 1024 x 600 touch screen, but the Nook Tablet benefits from a VividView display, Barnes & Noble officials said.
Barnes & Noble CEO William Lynch drubbed the Kindle Fire on its specs, calling it "deficient" as a media-playing device, partly because it has just 512MB of RAM, compared with the Nook Tablet's 1GB of RAM. Documents leaked on Engadget last week said the Nook's dual-core processor of the Nook Tablet would have a procession speed rated at 1.2 GHz, but Barnes & Noble said Monday that the Nook's dual-core processor is 1 GHz, the same as the Kindle Fire's.
The Nook Tablet has 16GB of internal storage, expandable with a slot for a 32GB memory card, while the Kindle Fire has 8GB of internal storage that Lynch said would be insufficient for when a user is not connected to the Internet over Wi-Fi.
Barnes & Noble officials said the Nook Tablet is based on Android 2.3, also called Gingerbread, but noted that it doesn't have a full browser or the capability to purchase all the apps available in the Android Market. That puts it in roughly the same category as the Kindle Fire, analysts said, with both products offered as a lower-cost alternative to the Apple iPad 2, which starts at $499.
Enderle said both the Kindle Fire and Nook Tablet would be used to perform the same functions for which 80% of iPad customers use their more-expensive tablets. The iPad's full access to the Apple AppStore and full browsing experience might not justify its higher pricetag for most users, however, Enderle said.
"At their lower price points, not having full browsers doesn't matter, because both Barnes & Noble and Amazon are making devices that are offering buy-through of their products," Enderle said. "These aren't full-on tablets and it's a very tight user experience. The iPad will be used the same way 80% of the time and at a far higher price."
Enderle and Gold said those in-store factors probably won't be seen as a significant difference, given Amazon's online sales success and return policies.
But Mainelli said in-store support is a "key differentiator for Barnes & Noble" that's enhanced by free in-store content over Wi-Fi that "Amazon just can't match."
Lowering the price of the original Nook Color from $249 to $199 probably won't give Barnes & Noble the big advantage it wants over Amazon, either, Enderle said. That's because the Nook Color falls into the category of an e-reader, not a tablet.
While Amazon wins on price, it also should win on availability of apps and content over Barnes & Noble, something that non-techie buyers might more fully appreciate, Gold said. "Barnes & Noble doesn't have the ecosystem and channel of Amazon," he said.
While the $50 price difference could matter greatly in the holiday shopping period, it might not last thatlong, Gold predicted. "I would expect that the Nook will soon meet the pricing of the Fire, once the initial products have shipped to the early adopters," Gold said. "I do expect to see a price war on tablets in the near future."
Posted by Janine E. Mooney, Editor
November 7, 2011