Tablet Wars: Barnes & Noble In Retreat

by on June 27, 2013 | ETFs Mentioned:

Tablets are not a relatively new innovation in the tech world; Microsoft introduced the Tablet PC in 2000, but consumers remained uninterested in the computing innovation for a decade. With the release of the iPad in 2010 the true tablet wars began, with traditional software companies coming head to head with consumer-product producers looking to capture the market [see The Best Dividend ETF For Every Investment Objective].

The Nook Flop

ipad tablet computerBarnes & Noble entered the market in 2009 with the Nook, a handheld E-reader that allowed consumers to carry thousands of books in one same device. While reviews of the E-reader were good, B&N was crushed early on by Amazon’s Kindle and the quick expansion the company took into tablet computing with the Kindle Fire. B&N scrambled to enter the tablet market, but the Nook tablet released in 2011 never gained consumer traction and after almost two years of poor sales and heavy losses, the company is cutting back. Fourth quarter sales of 2012 were so abysmal that the losses have been a strain on Barnes and Noble’s core bookstore business. While B&N are abandoning the Nook Tablet, it will continue to produce its staple black and white E-reader [also see Durable Goods Beat Expectations].

The Battle Rages On

While Barnes & Noble may be exiting the arena, the competition between tablet producers is only growing; below we highlight ETF options for investors looking to place bets in this growing industry:

  • Information Tech ETF (VGT, A+): With 17% of the fund dedicated to Apple, VGT is in a great position to profit from iPad gains. This overarching ETF also offers outstanding exposure to the general tech market, including all market caps [also check out the High Tech ETFdb Portfolio]
  • Market Vectors Retail ETF (RTH, B+): The Amazon Kindle started out as an E-reader but has quickly shaken up the tablet market. The online retailer offers a nontraditional view on the tablet market, earning it a space in the 25 holdings of RTH; the ETF only invests in the best overall performing U.S. retail companies. 
  • DJ Internet Index Fund (FDN, B+): Dedicating a 10th of the fund to Google has led this ETF to outstanding gains from not only the Google Nexus Tablet, but also its growing Android smart phone operating software [also see an Introduction To Options Strategies For ETF Investors]. 
  • The S&P North American Technology – Software Index Fund (IGV, B+): Microsoft may have been the first firm to introduce the tablet, but that doesn’t mean the company is the most popular tablet-maker. IGV offers 10% of its holdings in Microsoft, the most of any ETF on the market. 
  • MSCI South Korea Index Fund (EWY, B-): Reserving a massive 23% of holdings for Samsung, this fund easily offers the most exposure to the tablet producer, but it’s an extremely volatile hold. For a less aggressive market view, investors should look further into AAIT or AIA; both still have Samsung as the number one holding, but with more variety in their portfolios. 

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Disclosure: No positions at time of writing.