GO
Loading...

UK retailer Tesco launches cut-price tablet

Source: Tesco

U.K. supermarket giant Tesco launched its attempt to tap into the tablet computer market and boost its online shopping and download services Monday when it unveiled its £119 ($190.95) "Hudl".

The world's number three retailer (after Wal-Mart and Carrefour) in terms of sales said the device, which uses Google's Android operating system, will offer instant access to Tesco's online music and film store, Blinkbox, banking services and Internet shopping.

Tesco is targeting the Hudl at the budget-conscious part of the market. Unveiling the Hudl Monday, the company noted that three-quarters of U.K. households were yet to own a tablet — deeming the technology too expensive or intimidating.

"Being online is an increasingly essential part of family life and whilst tablets are on the rise, usage is still quite limited. We feel the time is right for Tesco to help widen tablet ownership and bring the fun, convenience and excitement of tablets to even more customers across the U.K.," said Tesco Chief Executive Philip Clarke.

Source: Tesco

The Hudl comes in four colors and goes on sale from September 30, in time for the pre-Christmas shopping boom. The tablet will compete with low-price tablets from the likes of Samsung , Amazon and Apple. Other models in the £100-£150 bracket include the Samsung Galaxy Tab 2, the Blackberry PlayBook and the Asus Google Nexus 7.

In addition, Asda, the store owned by Wal-Mart, released the Arnova 8 in 2011, which retailed for around £100.

(Read more: Still cool after all: New iPhone sales break record)

Apple leads the tablet market with a 32.4 percent market share in the second quarter of this year, according to global research firm IDC, with Samsung with a 18 percent share in second place.

Prior to the Hudl's launch, Benedict Evans, an analyst at Enders Analysis, said a Tesco tablet was "not a bad proposition".

"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," Evans told CNBC.

(Read more: Techs lose 'wow' factor, luxury brands regain 'cool')

Tesco, which has 20 million customers worldwide, is investing £1 billion ($1.60 billion) in a turnaround plan to improve its performance in the U.K., where it makes two-thirds of its profits.

Amundi Asset Management noted in a September report that Tesco aimed to increase its percentage of online purchases as a share of grocery sales to 15 percent.

"In the U.K., Tesco is overwhelmingly dominant (in the online grocery sales space), with a 60 percent market share (7 percent of its sales) in this retail format," said analysts led by Philippe Ithurbide.

Tesco shares closed flat on Monday, outperforming London's FTSE 100, which provisionally closed 0.7 percent lower on the day. The supermarket chain will report its first-half results on October 1.

—By CNBC's Katy Barnato

Squawk Alley