The Nook Tablet: Good, but is it enough?November 8, 2011: 7:35 AM ET
Apple and Amazon are fighting over the tablet market and Barnes & Noble doesn't want to be left out. But can its new device breathe life into its efforts?
FORTUNE -- Not content to let Amazon hog the spotlight this holiday with the Kindle Fire, Barnes & Noble unveiled the Nook Tablet, a hardware update to the Nook Color, launched last year.
Priced at $249 and shipping November 16, the Nook Tablet keeps the Nook Color's look but swaps the internals with a 1GHz dual-core processor, 1GB of RAM, and 16GB of built-in storage. (For comparison's sake, that's twice the RAM and storage of the Kindle Fire.) Also onboard: support for Netflix Instant and Hulu Plus. Meanwhile, Barnes & Noble's (BKS) existing e-reading devices received a price cut: the Nook Color dropped to $199, while the Nook Simple Touch will go for $99 with an updated display sporting 25% faster page turns, crisper text and improved contrast.
Up close, the Nook Tablet looks almost identical to the Nook Color, save for a lighter gray case. In other words, if you liked Yves Behar's clean industrial design the first time around, you'll like the Nook Tablet. It's also 10% lighter, though I didn't really notice. The Tablet isn't heavy by any stretch. But also like its predecessor, there's a bit of heft and sturdiness to the device that means you'll eventually find yourself switching hands or propping it on your lap.
The Nook Tablet runs on updated Nook software, version 1.4. Previous versions let users arrange favorite titles on the home screen and resize book covers with a quick pinch; the newer software adds media shortcuts in a pane near the bottom for quick access to apps, music, newsstands and music. In the upper right, a drop-down window shows recently browsed items.
The dual-core processor and doubled RAM promises a faster, smoother experience. My limited, initial time with the device proved at least that much. Pinch-to-zoom and swiping appeared faster, maybe not as uniformly smooth as, say, the iPad 2, but the speed bump is noticeable. New apps like Netflix (NFLX) Instant and Hulu Plus, which may be a big draw, streamed sharp video in 720p resolution. (Unfortunately, 720p streaming will not be available for Nook Color owners, even after they upgrade to v. 1.4 -- that much is exclusive to Nook Tablet.)
But will it sell?
The Nook Tablet comes at an important time for the company. Amazon (AMZN) made a splash last month when CEO Jeff Bezos unveiled four new e-reader models, including the Kindle Fire, a $199 Android-based reading tablet. Amazon is losing anywhere between $10 and $50 per unit on. The e-commerce giant appears willing to take a hit on profit so it can get as many Kindle Fires into customers' hands as possible and hook them onto its myriad online services. Amazon's 61% market share in the e-reader space and analyst predictions that the Kindle Fire could sell up to 5 million units during the fourth quarter meant Barnes and Noble had to make a move.
During the unveiling, CEO William Lynch was quick to point out the Nook Tablet's superior hardware specifications and didn't mince words when it came to the competition. "The Kindle Fire is deficient for a media tablet," he said, going through a side-by-side slide show presentation highlighting the differences, from to storage capacity to design. "The Fire has the same manufacturer as the PlayBook. That's why they look alike."
When the Nook Tablet launches, it faces a big question: Will consumers pay $50 more for it when they can pick up the Kindle Fire -- or the discounted Nook Color -- for less? Forrester analyst Sarah Rotman Epps believes they will. She projects Barnes & Noble will move between 1.5 and 2 million units this holiday season. "The Nook Color was a sleeper success," says Epps, which she estimates has sold between 5 and 7 million units to date. That might not measure up to Kindle Fire predictions and estimated iPad sales of 8 million domestically during the fourth quarter, but it's nothing to scoff at either.