GameStop Steps Into Tablet PC Sales

Videogame retailer GameStop Corp. (GME) plans to begin selling tablet-style computers as part of an effort to expand its gaming device offerings.

The company plans to begin selling tablets based on Google Inc.'s (GOOG) Android mobile operating system during the holiday season at 200 of its U.S. stores on Friday. GameStop's pilot program will include specialized tablets made by Asustek Computer Inc. (2357.TW), Acer Inc. (2353.TW) and Samsung Electronics Inc. (SSHNY, 005930.SE).

The devices, which will sell for their typical sticker prices in competing stores, will come with a set of seven free games, including Electronic Arts Inc.'s (ERTS) "Dead Space" sci-fi shooter and "Madden NFL" football game, as well as links to the GameStop's mobile application store, called "Kongregate Arcade," and the Android app marketplace.

"Customers have been telling us that they like to game on multiple devices," said J. Paul Raines, GameStop's chief executive. "We believe there is a gaming opportunity on tablets."

Analysts are more skeptical, citing poor sales of Android-based tablets and a dearth of games that have enticed the dedicated gaming audience that GameStop tends to attract. Cost is another factor, said Michael Pachter, an analyst at Wedbush Securities, who added that any asking prices around $400 or $500 will be challenging.

"I don't think anyone is going to buy one," he said.

GameStop's tablet initiative, which will debut in a small fraction of the company's more than 6,500 stores, comes as part of the game retailer's attempts to expand its business beyond typical boxed game sales. If successful, GameStop said it should begin expanding the program next year.

Some of the company's other programs have included increased emphasis on selling access codes for additional game content, such as extra maps and levels, alongside traditional titles. GameStop has also expanded its trade-in program to allow customers to obtain in-store credit for used Apple Inc. (AAPL) mobile devices, such as the iPhone.

Those credits can be used to purchase games as well as the new Android gaming tablets, which GameStop said it chose based upon their ability to play graphically rich games while also connecting to a high-definition television.

GameStop worked with each tablet and game maker to include special code that will interact with a wireless controller that GameStop developed to sell alongside the devices. The controller, which will cost an additional $39 and is similar in shape and size to one made for Microsoft Corp.'s (MSFT) Xbox 360, can control four of the seven free games on the tablet from as far away as across a room, GameStop said.

"It doesn't replace the gold standard of the gaming console in your living room, but it's a good experience," said Tony Bartel, GameStop's president. He added that GameStop hopes to spark increased interest in high-quality games for tablets as a result. "We expect manufacturers to jump in and say 'Ah-ha, that's what consumers are looking for.'"

-By Ian Sherr, Dow Jones Newswires; 415-439-6455; ian.sherr@dowjones.com

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