Monday, November 7, 2011

The Nook Tablet and the Tablet Market

Nook Tablet and the Tablet Market

There is perhaps no better illustration of evolving technology/innovation strategy than today’s tablet market. Since Apple introduced its disruptive innovation (Christensen and Bower, 1996), the iPad, with raging success, competitors have struggled to craft a competitive strategy. Similar to the backlash following the introduction and resulting dominance of the iPod, firms such as Amazon, Barnes & Noble, Samsung, Motorola, and many more, seek to capitalize on this permanent shift in consumer demands.

On November 7, Barnes & Noble unveiled its Nook Tablet, a device that aims to capture its target readers and the tablet market. The tablet will retail at $249, compared to the $199 Amazon Kindle Fire and $499 Apple iPad, and will include features such as: free access to cloud service, nine hours of video battery life, 16 GB of storage, Wi-Fi, and the Android operating system. The entry of Barnes & Noble to the dynamic tablet market is certainly no surprise; however, a closer look reveals the company’s careful strategic planning.

As mentioned in the Slater & Olson reading this week, competitive rivalry has the greatest influence on both ROI potential and business-specific risk. Thus, innovation is the key to achieving and sustaining competitive advantage. In the tablet and greater technology industry, this must come in the form of product innovation. Barnes & Noble’s entry into the market is one of many market responses to disruptive innovation. With the iPad being the market dominant, B&N had to decide on the basis to which it could compete. While it could have competed on price (slashing price below its more likely competitor, the Kindle Fire), B&N decided to differentiate its offering. CEO William Lynch stated, "We want to be the most innovative company in digital reading. We are servicing core readers first." By targeting their core reader, B&N is replicating the successful Apple strategy of anticipating customers’ needs and remaining aligned with core competencies. The company is not overly concerned with price-cutting, but with offering access to a unique suite of services.

Whether this strategy is successful enough to dent the market remains to be seen. Industry factors influence both strategy selection and if that strategy is successful.

Do you believe that B&N should have competed on price with its initial entry to the market? Is the iPad too tough a contender for differentiating on product features? How will the Nook Tablet change the positioning of its competitors? When future competitors enter, what will they now need to consider?

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