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Given the rumors and estimates on how many it will sell, you might think Amazon.com (NASDAQ:AMZN) already has a tablet on the market. As of this writing, an Amazon tablet you can actually touch remains a dream. The company only offers several versions of its Kindle, which commands nearly half of the e-reader market.

With its Nook Color e-reader, Barnes & Noble (NYSE:BKS) "blur(s) the line between e-book reader and tablet." Taken together, Barnes & Noble's Nook line and Amazon's various Kindles comprise roughly 75% of the e-reader market. These numbers contribute to the likelihood that both companies will launch full-fledged tablets in the near future.

In this article, I consider the potential impacts of each company's probable tablet foray, including how it could affect their own businesses as well as their competitors' businesses. I close by offering ways to play yet another potential pivotal point in the world of new media gadgets.

An Amazon Tablet: Netflix (NASDAQ:NFLX) Killer?

As I have explained, Amazon will not do a tablet to compete with Apple's (NASDAQ:AAPL) iPad. Not only does Amazon CEO Jeff Bezos know that his company cannot win a head-to-head battle with Apple, but there's no need to take your company's eyes off of the ball by trying. At day's end, an Amazon tablet will exist to drive business back to Amazon's e-commerce core. Increasingly, however, it seems that Netflix could be a ripe target for Amazon's tablet endeavor.

First, Amazon did not codename its tablet "Hollywood" for nothing. And one look at Amazon's online streaming effort reveals it's truly a work in progress. Meantime, Netflix might be entering a vulnerable period after its seemingly endless streak of success. Sony (NYSE:SNE) movies remain out of the Netflix stream. To get them back, Netflix will likely have to pay up to Starz (LSTZA) sooner rather than later. If Netflix pays to the tune of $300 million per year, it could trim its EPS by $0.40. The time looks ripe for Amazon to open up the war chest to (a) drive up the prices Netflix must pay to acquire content, (b) outbid Netflix on content it wants, and (c) secure key content that Netflix simply cannot afford.

Amazon knows it cannot continue to generate revenue from physical DVDs and such forever, just like its e-reader transition anticipated the reality that hard copies of books will likely continue to fade in popularity. Amazon's relatively strong cash position and impressive ROI history make it nimble enough to inflict at least a little collateral damage on Netflix while nurturing its major and emerging franchises (e-commerce and attendant features such as Prime and Cloud Drive) in step with changing consumer tastes and preferences.

Nook Color: The Key to Barnes & Noble's Survival?

For all intents and purposes, it's apparent that the Nook keeps Barnes & Noble alive. It also makes the company an attractive takeover target. While not final, I would bet money on John Malone's Liberty Media Corporation (LCAPA) getting past the Barnes & Noble board and buying the bookseller out for around $17 a share. Liberty wants Barnes & Noble for the Nook, which it would transform into a full-fledged tablet.

In a previous Seeking Alpha article, I considered the potential synergies Liberty could create by entering the Nook, all the way, into the tablet wars. But, again, please pardon the hyperbole, because, as is the case with Amazon, Liberty wants absolutely no part in competing against Apple through Barnes & Noble. Instead, Liberty would use each of its properties/interests to not only promote the Nook, but have the Nook promote them.

For instance, Liberty's QVC could gain some street cred by becoming a featured online e-commerce app on the Nook. Of course, QVC could feature the tablet on television. Similar cross-promotional strategies exist between Sirius XM (NASDAQ:SIRI) and a Nook tablet. Maybe the Nook can help Sirius XM CEO Mel Karmazin finally bring his company into the 21st Century vis-a-vis advertising, marketing and brand awareness?

And, of course, the Nook could become the cornerstone of Barnes & Noble's brick-and-mortar stores. These stores will certainly undergo a makeover, with or without Liberty. Diverse voices, ranging from tech writers to Nook users, see a future where a Barnes & Noble location looks more like an Apple Store - with the focus on touching, feeling and hanging out - rather than the current, standard big-box bookstore presentation.

How to Play It

Simply put, I see no future for companies, other than maybe Google (NASDAQ:GOOG), that decide to compete against Apple. Research in Motion (RIMM) provides an excellent case study to support that point. I have faith that well-managed end-around strategies, so to speak, can make good use of the market share Apple leaves for everybody else.

As an investor, it's impossible to predict who will come out alive. Or, more specifically, it's impossible to guess which stocks will rise and which stocks will fall as the scenarios I discuss play themselves out. While I think my speculation will prove plausible, it's unlikely that exactly what I say about Amazon and Barnes & Noble's tablet plans will come to, as constructed here. That said, I firmly believe the outcomes will bear a close resemblance.

With that mind, I think it makes sense to assemble a basket of stocks that plays the notion that two of the most popular e-readers go wild and give birth to real, living and breathing multi-purpose tablets. At the core of this basket sits AMZN, BKS and LCAPA. Associated speculative plays include SIRI, which could immediately benefit from a Liberty buyout of Barnes & Noble and a decked-out Nook. You can read more about creating baskets of stocks through a brokerage account here, in an article on the subject in relation to electric vehicle stocks. And, please note, this is a strategy for long-term investors with a time horizon of at least 24 months.

Every investor needs to conduct his/her own due diligence; you should only use my articles - and most others - as starting points for your own research efforts. Ultimately, if you believe in the space and the potential of the Amazon and Barnes & Noble stories, you'll want to consider other derivative plays to round out a "readers gone wild" basket of stocks.

Disclosure: I am long SIRI.

Source: Readers Gone Wild: Evaluating the Prospects of Amazon.com, Barnes & Noble Tablets