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Why are Tesco planning to launch their own tablet?

According to a report in the Sunday Times, Tesco is planning to take on the likes of Google, Amazon and Apple by launching its own tablet. The British supermarket already uses its Technika brand on a range of electrical products, but Tesco’s tablet ambitions appear far more comprehensive.

The launch of a tablet would form part of a significant shift in the way Tesco goes about its business. Its supermarkets – particularly the newer, larger stores – have performed poorly in recent times, and the company recognises that opportunities for growth in this area are limited.

Tesco has tried to expand internationally, with mixed results. Although many of its businesses in Europe and Asia perform reasonably well, a failed attempt to crack the American market cost the company £1 billion (€1.17 bn/$1.57 bn).

Focus on digital services

The influence of Tesco in the UK has not simply stopped at selling food in large retail outlets. The company also has a heavy presence in clothing, homeware, technology and the convenience store market.

There is a reluctance within Tesco to be left behind in the rapidly-growing digital revolution. The company is all-too-aware that it could be muscled out of its domestic market by the like of Google, Amazon and Apple.

In order to establish a comprehensive digital presence, Tesco has acquired a video on-demand company, a music streaming service and an ebook platform.

Tesco’s digital presence is gradually being rebranded using the blinkbox name, after the video on-demand company it acquired.

The We7 music streaming service has been relaunched as blinkbox music and Garry Blackman – formally the head of books at Tesco – has recently been appointed to blinkbox books, an ebook service that is likely to launch in time for Christmas.

Could Tesco challenge Google, Amazon and Apple?

There is no shortage of cheap tablets on the market right now. Rumours suggest that Tesco’s new device will be priced at around £130 (€152/$204), with a possible pre-Christmas release date.

A price of £130 would match the current cost of a Kindle Fire. But with Google, Amazon and Apple already established in this market, why do Tesco think they can succeed?

A big factor in Tesco’s decision to look at selling its own tablet is the fact that brand loyalty with this type of product is minimal. If the company produce a well-specced, affordable device that is readily available across its massive network of UK stores, then there will likely be consumer interest.

Tesco’s growing digital empire also allows it to offer a complete package of services. So anyone buying Tesco’s tablet will have access to a big library of films, TV shows, music and books.

By releasing a tablet Tesco will hope to quickly establish a significant digital presence through Blinkbox, challenging Google Play, Amazon’s MP3 store and LoveFilm service, and Apple’s iTunes.

In the Independent, Fiona Keenan – consumer insight director at Kantar Worldpanel – explained that Tesco is in a good position to roll out such an offering.

“Releasing a tablet linked to its own digital download service, blinkbox, is a smart move by Tesco,” said Keenan. “Tablet owners are incredibly loyal to the download store they are first linked to – 92% of Apple customers that download digital video do so via iTunes and Google has also been successful in attracting its tablet users to the Google Play store.

“While this level of loyalty will be challenging to achieve, Tesco is in a good place to profit from both initial hardware sales and the long-term boost to its digital services.”