Nook Tablet vs. Kindle Fire: The Battle for Holiday Shoppers

In the stock world, Barnes & Noble (NYSE: BKS) doesn’t even occupy the same stratosphere as Amazon (Nasdaq: AMZN). Barnes & Noble’s stock price hasn’t approached $40 in at least five years whereas Amazon’s stock has a 52-week low of $156.77. Comparing the two is like comparing apples and oranges.

But that hasn’t stopped Barnes & Noble from trying to go toe-to-toe with Amazon in one key area starting this month: electronic tablets. Barnes & Noble is set to debut its new Nook Tablet, a mobile device with a 7-inch touch screen that allows users to watch movies, listen to music, read books and check their email, among other functions. It hits the shelves in Barnes & Noble’s 700 U.S. bookstores next week.

Interestingly, next week is also when Amazon will start shipping its own electronic tablet, the Kindle Fire. Like the Nook, the Kindle Fire has a 7-inch touch screen, offers movies, apps, games and books, and allows for ultra-fast web browsing. With the holiday season fast approaching, the two devices will be in direct competition with one another. Game on.

The question is: Can a mobile device created by a brick-and-mortar bookselling operation with a market capitalization of $852 million (Barnes and Noble) realistically compete with an online electronics shopping giant with a market capitalization of $96 billion (Amazon)? If the Nook Tablet is everything Barnes & Noble CEO William Lynch says it is…perhaps.

Lynch called the Kindle Fire “deficient.” He said that the Nook is a superior product with way more memory space. In that regard, he’s right: The Nook has 16 gigabytes of memory, double the Fire’s 8 gigabytes. According to product reviewers, the Nook is also faster than the Fire, has a brighter screen, weighs less, and will theoretically have better customer service since Barnes & Noble has the advantage of actual stores, unlike Amazon.

But here’s the catch: at $249, the Nook is $50 more expensive than the Kindle Fire’s $199 price tag. Lynch insists the price difference is justified given all the features the Nook has that the Fire doesn’t. But will extra memory space and a brighter screen be enough to convince shoppers to shell out an additional $50 when deciding between two products that are otherwise virtually identical?

Time will tell. Meanwhile, both devices will have the added pressure of competing with Apple’s iPad 2. Granted, at $499 the iPad is a higher-end tablet that appeals to a wealthier demographic. Still, enough people are willing to spring for a product made by Apple that it will undoubtedly steal some sales away from both the Nook and the Fire.

For now, though, the introduction of the Nook Tablet has been a boon for Barnes & Noble’s stock. Barnes & Noble’s stock price has risen 24 percent, to $14.65 a share, in the last two days. That’s fast approaching its 52-week high of $15.38.

While Barnes & Noble will never be able to compete with Amazon and its vast financial resources, its willingness to get into the mobile device game and go head-to-head with the big boys is a sign that it isn’t afraid to alter its business model in these ever-changing times. That’s the sort of mentality that can improve earnings in a time when the Barnes & Noble’s book sales are sharply declining.

And if the Nook Tablet can hold its own against the Kindle Fire this holiday season, its stock may continue to rise.

Published by Wyatt Investment Research at