Would You Buy a Best Buy Brand Tablet?
Insignia Flex will sell for $239 to $259, giving the company a play at the booming tablet market. It is expected to be available exclusively at Best Buy beginning on Nov. 11, giving the chain ample time to win over holiday shoppers.
Is the Price Too High?
The initial reaction is that Best Buy may be pricing itself out of the entry-level market if Insignia Flex doesn't offer substantially better specs and features than Google's (GOOG) Nexus 7 and Amazon.com's (AMZN) Kindle Fire HD.
Both of those seven-inch tablets are Android-based and start at $199 apiece.
An important distinction is that the Insignia Flex will be a 9.7-inch tablet, putting it in the same size category Apple's (AAPL) iPad and Microsoft's (MSFT) upcoming Surface. Those gadgets cost roughly twice as much, but they are also proprietary operating systems. Only Apple can make an iOS tablet that feeds into its rich ecosystem. Microsoft licenses Windows 8 for third-party tablets, but it's ultimately in control of where it goes.
Android may have been developed by Google, but the open source nature of the platform makes it easy for anyone to crank out an Android device.
That's where Best Buy will have a problem. It sells plenty of Android tablets, including some models for less than $100. However, Amazon.com -- and possibly even Google -- are believed to be selling their tablets at a loss. They can afford to do that. Google is raising the profile of Android and benefiting from the Android marketplace. Amazon.com has digital music, movies, books, and software to sell.
Recognize the Insignia?
Insignia is Best Buy's own consumer electronics brand. It slaps it on TVs, digital photo frames, and even light bulbs. It's a private label, but it's largely seen as a commodity.
Folks buy an Insignia monitor or a speaker system because it's cheaper than the name brands. If this tablet hits the market with similar specs but at higher price points than the Nexus 7 or the Kindle Fire HD, that value proposition obviously won't apply.
The solution for Best Buy, naturally, is to find a way to make the Insignia Flex stand out on its own.
However, what Best Buy does have is clout. It can work with the labels, studios, publishers, and developers that rely on the retailer to sell their wares to create content for the Insignia Flex.
Toys R Us is hoping its new Tabeo tablet will woo parents because of dozens of preinstalled apps. Best Buy will have to bring something similarly big -- and something that only Best Buy can offer -- to its buyers if the Flex is to fly.
Best Buy has a shot here, and if the Nov. 11 release date is accurate we will find out soon enough if Best Buy is serious about making its proprietary tablet foray count.
It doesn't have much of a choice at this point. If shoppers are going to swear off Best Buy's CDs, DVDs, books, and video games, it may as well find a way to make sure that its tablet-tethered customers are still relying on Best Buy for their media needs.
Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Best Buy, Amazon.com, Google, Microsoft, and Apple. Motley Fool newsletter services have recommended buying shares of Google, Amazon.com, and Apple. Motley Fool newsletter services have recommended creating a synthetic covered call position in Microsoft and a bull call spread position in Apple.