Barnes & Noble, Inc. (BKS), Amazon.com, Inc. (AMZN): Budget Tablets, Is the Game Worth the Candle?

Amazon and Barnes & Noble, Inc. (NYSE:BKS) have the “excuse” that selling tablets at or slightly below cost can drive consumer loyalty and future content sales that justify the initial investment. However, as my colleague Demitrios Kalogeropoulos recently noted, content sales growth has been slowing at both Amazon and Barnes & Noble despite these investments. This trend calls the “tablets drive lots of content sales” strategy into question.

Barnes & Noble has already called it quits in the Android tablet market. HP and Amazon also need to think long and hard about whether the potential long-term benefits of competing in this market outweigh the upfront losses. With irrational pricing as the order of the day, it seems increasingly unlikely that Android tablet vendors will prosper.

The article Budget Tablets: Is the Game Worth the Candle? originally appeared on Fool.com and is written by Adam Levine-Weinberg.

Fool contributor Adam Levine-Weinberg owns shares of Apple and Hewlett-Packard, is long January 2015 $390 calls on Apple, and is short shares of Amazon.com. The Motley Fool recommends and owns shares of Amazon.com and Apple.

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