It has been clear for some time that probably only full-scale retailers have the capacity to respond to Amazon, Google, Apple and other digital giants. They have the advantages of scale, access to capital, direct customer interaction and customer inertia working in their favour.

Of course, those advantages are threatened by online retailers like Amazon and by the shift to digital consumption of media. It makes sense then that really forward-looking retailers will attempt to move into the digital distribution and retail space. Many of them have been offering online grocery shopping effectively for some time, long before Amazon or other newer entrants. Tesco has been making what look like smart moves in digital media for a while. It will be intriguing to see if this forthcoming tablet play works.

Success, however, cannot be measured by units sold alone. A good sign of it working would be of the company sells lots of tablets AND signs lots of people up to its digital content services. At the kind of price point the articles on the tablet are talking about, content sales and customer acquisition for the digital services are the goal in the short and medium term.

The question that arises for me is what’s the longer term play for Tesco? How can it build on success in the UK (if it materializes) and can it compete with the giants even if it does succeed in the UK. The costs of such competition can be quite hefty, as B&N has learnt to its cost:

Tesco might be able to hit the £99 price using a cashback-style promotion, Wood suggests: “I can see Tesco using substantial discounts on other services such as bundled media from Blinkbox, or vouchers for discounts on petrol or groceries through its ClubCard loyalty scheme.”

The tablet would take on competitors from the likes of Apple, Google and Amazon, and will be tailored to online shopping and video viewing – both areas where Tesco is looking to capitalise on its position.

via Tesco tablet expected on 23 September – and may be very low-priced | Technology | The Guardian.