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Tesco may launch tablet to rival cheap androids

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Global supermarket chain Tesco plans to launch a tablet device that will rival the likes of Apple and Amazon, the Sunday Times newspaper reported on the weekend, with analysts saying a Tesco tablet could prove popular at the cheap end of the market.

The newspaper said that Tesco is looking to enter the fiercely competitive tablet market with its own device that will come loaded with books, films and music, and could hit the shelves in time for Christmas.

(Read more: Tesco plans to sell its Fresh & Easy US stores)

The tablet is also expected to have apps that allow access to the supermarket's online grocery store and bank deals, as well as Tesco's own music and film download service, Blinkbox.

If successful, the product could help revive Tesco's DVD and book sales market, which has been put under pressure from online retailers like Amazon. However, analysts are mixed in their views on whether the supermarket chain's tablet will impact an already-saturated consumer area.

"The biggest challenge that Tesco faces is to get consumers to buy the tablet. They need a unique selling point. What are they going to bring to make it different?" Neil Saunders, retail analyst at Conlumino, told CNBC. "It won't be a game changer to their sales fortunes and it seems to be more of an experiment."

But one analyst said that a Tesco tablet was "not a bad proposition" for a certain market.

"There is a market for iPads and quite separately there is a market for very cheap generic android tablets, and this is where Tesco's device falls," Benedict Evans, analyst at Enders Analysis, told CNBC.

(Read more: Tesco quits US and takes $3.5 billion global writedown)

He said it was likely the Tesco product would be sold at around 150 pounds ($235) and therefore would appeal to a wide audience.

Extensive details of the tablet were not available, but the Sunday Times cited industry sources who said the product would be "high quality" and similar to Amazon's Kindle.

If Tesco go ahead with the plan, it will not be the first supermarket to take on the tablet market. Asda, the store owned by Walmart, released the Arnova 8 in 2011 costing around 100 pounds.

For Tesco, the tablet would not only be used to drive sales, but would also be key in "brand building", according to Chris Lewis, a telecoms and ICT analyst at Lewis Insight.

(Read more: Wal-Mart tops estimates, but guidance is weak)

"Tesco are putting their device out there so they can use it as a window into the Tesco world and it is part of that brand building," Lewis told CNBC. "They have to use all possible channels to drive the customer through to the product. Tesco will see it as an extension of their brand to reach the customer."

Tesco has been trying to appease investors after sales at its UK stores fell 1 percent in the 13 weeks to May 25. The supermarket chain is investing £1 billion pounds ($1.56 billion) in a turnaround plan to improve its performance in the U.K., where it makes two-thirds of its profits.

Tesco made no comment on the reports that it was launching a tablet device.

—By CNBC's Arjun Kharpal: Follow him on Twitter @ArjunKharpal and @CNBCWorld

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