Argos to enter tablet market with £99 iPad rival

The chain is to launch an own brand 7in budget device which it hopes will grab a share of Christmas tablet sales.

Argos is the latest non-technology firm to expand into the tablet market, after the launch of Tesco’s Hudl last month.

The stores will hope to emulate the success of Amazon’s Kindle Fire, which sold more than a million devices a week in the weeks following the product’s launch in November 2011.

John Walden, managing director of Argos, said he believed there would be demand for the device, called MyTablet.

“Millions of people have bought tablets during the last year but there is still around 75 per cent of the UK population without one,” he said. “We know that tablets will feature heavily on Christmas lists this year.”

Tablet devices are set to overtake the number of traditional PCs, with 229.3m units worldwide. The market is also predicted to grow fivefold by 2017.

The latest offerings from Argos and Tesco, which both run on the Android operating system, are priced at just over a third of the cost of market leader the iPad – at £99.99 and £119 respectively.

Apple, which has sold more than 100 million iPads since its 2010 launch, has sent out invitations to an event on 22 October where it is expected it will announce the launch of the new mini iPad alongside the iPad5.

The price points are likely to be in line with the current model, which starts at £269.

Rival Samsung offers two smaller tablets – the latest version of the Note, which was announced in September, and the Tab, which retail at £300 and £250 respectively.

“Following the launch of Tesco’s pocket-money priced Hudl, Argos’ effort is more evidence of how the tablet market is growing,” said Oliver Folkard, technology expert at uSwitch.com.

Experts believe companies such as Tesco and Argos are likely to follow in the footsteps of Amazon’s Kindle range by regarding the products themselves as loss leaders – priced low to outperform the market leaders – and plan to bring in a profit from the apps and other revenue-generating services available on their tablets.

“Amazon are the masters of loss-leading. It has been estimated that they barely break even for every Kindle Fire HD sold,” said technology expert Josh Welensky of Advanced MP3 Players.

Morgan Stanley estimated Amazon made more than $565 million (£353m) profit from their Kindle division in 2012, with the $500m loss from the hardware offset by income of just over $1 billion, from the sale of eBooks, advertising and apps. Tesco has deployed the “Amazon approach” with its Hudl, offering a string of revenue- generating apps and services – but experts said the lower spec of MyTablet could see Argos generate a small profit from the hardware itself, while it uses its tablet to push its own store app, which lets users shop online.

“Argos are likely playing a different game to Tesco, with their lower-powered offering, squeezing a slim but steady profit on the hardware front,” added Mr Welensky.

The firm is looking for opportunities for growth as other high street stalwarts such as Woolworths have fallen victim to changing consumer needs. But it has not been immune to the recession. Parent group Home Retail saw profits fall from £426m in 2008 to £130m last year.

Argos’s sales have only just begun to grow again, for the first time in more than five years, but 75 of its 735 stores face closure.

Oliver Folkard: You get a lot for your cash with MyTablet

Following the launch of Microsoft’s pricey Surface slates and Tesco’s pocket money-priced Hudl, Argos’ effort is more evidence of how the tablet market is growing.

From premium devices at premium prices such as the iPad to cut-price, retailer-branded tablets at the other end, there is now a tablet for everyone.

MyTablet’s price means Argos – like Tesco – is selling its tablet at a loss, especially given that it’s similarly equipped but is £20 cheaper than the Hudl. While this means both retailers could lose out initially, they’ll be hoping to make money from customers in other ways. Both tablets come pre-loaded with the retailers’ apps – signs tablets may form an integral part of retailers’ customer-retention strategies in years to come.

MyTablet doesn’t compare terribly well when pitched against the likes of the iPad and Samsung’s Android-powered Galaxy Tab range, and is unlikely to win any plaudits from the technology press or many admiring glances from early adopters. However, that’s not the market it’s aimed at.

At £99, it’s pitched perfectly at Argos’ core target market of cost-conscious shoppers and is likely to feature under the tree in many a household this Christmas. The extensive selection of free apps and games from the Android market make it even more attractive to anyone on a budget.

Despite the price, the specs aren’t bottom of the range. MyTablet runs the latest 4.2.2 version of Android, packs a decent screen for gaming, and video and is powered by a sinewy dual-core processor

• Oliver Folkard is a technology expert at uSwitch.com