Market Insight

Tesco sells more than 400,000 Hudl tablets in three months

January 13, 2014


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Tesco, one of the world’s largest retailers, has sold more than 400,000 of its Hudl tablet in the three months following its launch on 30th September 2013. Tesco’s Hudl tablet features a 7 inch screen and runs Android. Tesco reported that it had sold around 300,000 units by the start of December and the remaining 100,000 units were sold by months end. The company now plans to release a second-generation Hudl tablet in 2014.

Our Take:

Considering that Tesco was not the first of the “big 3” multinational retailers (Walmart, Carrefour, and Tesco) to offer its own tablet, the fourth quarter showing of 400,000 units is quite respectable. The Hudl tablet was somewhat late to the game and faced a strong field of competitively priced Android tablets. Carrefour introduced its own Android-based tablet back in April of 2011. Walmart, by contrast, has yet to offer a Walmart branded tablet, offering instead a variety of third-party alternatives for consumers, from low-end Android tablets to iPads.  

Amazon sold in the region of 200k units of their Kindle Fire tablets in the UK, during Q4 2013. Comparing Tesco’s sales in the UK with preliminary Amazon’s sales, the Hudl performed significantly better in the UK marketplace than Amazon’s Kindle Fire tablets.  Tesco’s Hudl is priced competitively at £119 ($189) with Amazon’s entry level Kindle Fire HD tablet, which retails at £119 ($189) and well below Amazon’s Kindle Fire HDX tablets which start at £199 ($318). The big price difference lies in Tesco’s Clubcard offer, which allowed members to use vouchers and purchase the Hudl for only £60 ($95), half of the regular price.  The lower cost certainly contributed to the higher sales figures for Tesco, with user reviews of the Hudl skewing heavily towards Clubcard members.

Tesco is willing to subsidize some of the tablet cost for its club members, hoping to offset that loss with a future return of increased purchases from tablet carrying members.  Tesco club membership is currently free. This model is different from Amazon’s, where prime members pay an annual subscription fee in return for fast, free shipping of physical goods and access to a variety of online content. Prime members do receive any special discounts on the cost of physical goods compared to the price offered to non-members.

Tesco has now announced plans to release a second generation Hudl tablet in 2014. The second generation will feature improvements in software and hardware. Currently, customers can access a variety of Tesco services (groceries, banking, Blinkbox, and Clubcard) utilizing a dedicated launch button. Tesco may move to integrate the features of services such as Blinkbox and the Clubcard into the Hudl operating system as Amazon has done, rather than just offering easy access to them via a launch button. On the hardware side, Tesco may enhance the current 243ppi, 1,440x900 HD display and the cameras, both of which have received less than favorable reviews from consumers.

Other possibilities include expanding Hudl tablet availability into other areas where Tesco stores are located. At present, Hudl is sold in 1,000 Tesco stores and online in the UK. Tesco operates stores in the Czech Republic, France, Hungary, Ireland, Poland, and Slovakia as well as in a number of Asian countries, including China, India, Japan, Malaysia, South Korea, Thailand, and Turkey. Emerging markets offer one of the largest unit growth opportunities for tablets.

A potential area for growth for Tesco would be a future generation Hudl that operates as a mobile device. Since Tesco already operates a telco service, Tesco Mobile utilizing the O2 network, Tesco could use the base model of the Hudl for a mobile enabled device that works more like a hybrid of a tablet and a smartphone. This would necessitate developing a cellular version of the tablet, with network capability geared to the target market.

 

Geography
UK Western Europe
Organization
Tesco
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