Trying to enter the consumer technology market right now is risky business no
matter what youre looking to sell. Want to sell self-published electronic books
at low prices to try and cut in on Amazon s (NASDAQ: AMZN ) action? If you do,
youre taking a big risk. The same goes for Microsoft (NASDAQ: MSFT ) and Nokia
(NYSE: NOK ). Trying to take on Apple (NASDAQ: AAPL ) and Google (NASDAQ: GOOG )
in the mobile market is no small task. But theres a difference of scale between
these examples. Plenty of opportunity still exists to find an audience in the
digital service market streaming video, downloadable books, music and games
whereas the portable device market for downloading that media tablets and
smartphones is closed off at this point. iTunes doesnt own digital media
distribution, but the iPad does own the tablet market. GameStop s (NYSE: GME )
latest venture then is both risky in a promising way and risky in a completely
mad way. The video game retailer announced Monday that it plans to sell its own
branded tablet PC which runs on Googles Android operating system. The new tablet
will be marketed as a gaming device first and a multipurpose tablet in the iPad
mold second. To date, would-be contenders for the tablet crown have tried to
mimic Apples device in their breadth of features rather than trying to cater to
a specified niche. At first blush, GameStops plans to enter the device market
seem insane, but the company plans to mitigate some of the risk by licensing the
use of a tablet thats already on the market. Speaking with website Games
Industry.biz , GameStop president Tony Bartlett explained his companys pragmatic
approach : I dont see any need to create a new (tablet) with the three hundred
or so already on the market. We have a refurbishment center and we can bring in
product and preload certain games onto it. Its an Android device. Bartletts
statements at least rule out the possibility that GameStop had bought up
Hewlett-Packard s (NYSE: HPQ ) stock of the undying TouchPad tablet , but they
do beg the question: Whose tablet is GameStop buying up? Bartlett said the
company is testing a variety of tablets and even intimated that multiple
manufacturers will be behind this GameStop-certified gaming platform. What is
clear is that the company hopes having this device on the market will help
solidify its multiple digital distribution businesses that it has invested
heavily in developing during the past 18 months. Its in that market that
GameStop is taking the least risk as its products are in demand and stand a good
chance of finding their audience. Outlets like the web portal Kongregate, which
GameStop purchased in early 2010, and digital PC games downloaded from GameStops
store website online earned the company $98 million in the second quarter of
this year , almost 42% of its profits. Having a device to help push these
services will only help grow those earnings. Most promising for GameStop and its
shareholders, though, is the companys proposed cloud-based streaming games
service. The still-unnamed, still-in-testing service will allow users to play
Microsoft Xbox 360 and Sony (NYSE: SNE ) PlayStation 3 games on a PC by running
them on GameStops servers and streaming them to the audience a sort of Netflix
(NASDAQ: NFLX ) streaming option for video games. Bartlett said GameStop is
testing a game controller add-on for its new tablet so consumers can
specifically play games like Activision Blizzard s (NASDAQ: ATVI ) Call of Duty:
Modern Warfare 3 . If GameStop can find a way to sell its tablets at a low cost
and manage to give audiences access to both high-profile retail releases and
light, cheap App Store-style content at equally low costs, this tablet might
just be a serious win for the company. As of this writing, Anthony John Agnello
did not own a position in any of the stocks named here. Follow him on Twitter
at
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