Barnes & Noble Launches Cheaper Nook Tablet to Compete with Fire

The retailer's new tablet will sell in conjunction with the $250 model and feature 512-megabytes of RAM while still offering support for Hulu Plus, Netflix and the apps that are available on the more expensive version of the device.

Barnes & Noble has not released any additional information, but analysts expect the tablet to have the same design as the current Nook Tablet. Analysts expect Barnes and Noble to continue to sell the $250 Nook as a premium device.

The launch of a $200 Nook Tablet comes after third quarter earnings for the company were disappointing. Overall sales increased but Barnes & Noble failed to make the impact in the tablet market that it had hoped, and the price different between the original Nook Tablet and Amazon's Kindle Fire may have been the difference.

The new Nook Tablet features the same amount of on-board memory as the Fire and will sell for the same price while offering similar services. Both devices run on a modified version of the Android 2.3 Gingerbread OS. The Fire offers users content through services like Amazon Prime and its Kindle book store, but the Nook Tablet combats it with other video services and a book store of its own.

A $50 price difference likely swayed some customers to choose the Fire over the Nook Tablet, but many users also went with Amazon's device because of the Kindle name is more recognized. Now that Amazon and Barnes & Noble both have devices at the same price point, competition between the two could level out, but the quickly evolving tablet market could disrupt the strategy of both companies.

The Kindle Fire and Nook Tablet were both launched as low-cost alternatives to Apple's iPad. However, with the release of the iPad 3 looming, analysts believe Apple will choose to keep the iPad 2 on the market at a discounted price. If Apple brings the price of its tablet below $400, it may begin to appeal to many customers Amazon and Barnes & Noble targets.

Price may not be the only reason for the disappointing performance of the Nook Tablet, but if it played any role at all, Barnes & Noble's new device will likely jump-start sales, even if added competition from Apple is right around the corner.