google nexus 7

GameStop Corp. (NYSE:GME) recently announced that they will be taking preorders for Google Inc (NASDAQ:GOOG)’s Nexus 7 tablet and you get a price cut if you trade something in.  GameStop will be offering the 16GB version of the tablet through its stores and customers are able to receive up to 30% off with trade ins.

This latest move could be the jumpstart that GameStop desperately needed.  Some analysts are saying that buying the new tablet from GameStop may be the better way to go than buying it directly from Google.  While GameStop only carries the 16GB version, it offers free shipping when you preorder in the store, rather than online.  Not to mention up to 30% off if you trade in your old game hardware, games, Apple Inc. (NASDAQ:AAPL) accessories, etc.

Wherever you go to buy the Nexus 7 tablet, Google and GameStop will both be giving customers a $25 credit which can be used to buy apps in Google Play app store for the Android.  So far we know that Google is planning on making shipments in about 2 to 3 weeks but GameStop has on their site July 31st.  However a GameStop spokeswoman told CNET that shipments are expected in mid-July, so there is some cloudiness when it comes to exact shipment date.

In addition to being able to buy the Nexus 7 tablet, GameStop has announced a new trade in program where customers can bring in their old tablets in exchange for up to $200 in cash or $250 in store credit.  However, trade in value depends on the value of the tablet.

For awhile now, GameStop has been looking for a good way to hedge against the headwinds that currently face the video game industry.  It appears that tablets and other consumer electronics that feature apps and other mobile gaming is the key to their hedge.  Since tablets feature popular games, GameStop can consider these devices as “video game consoles” in addition to its other features.  The bottom line is that it will work and this very well could be what saves GameStop, which was not looking very good earlier this year.

Management has been forced to cut jobs and close stores in an effort to cut costs as the video game industry is currently going through a transition.  As tablets and smartphones become more popular, consumers buy the games on the phones/tablets which is priced anywhere from free to $5.  This is much more favorable for a consumer watching their spending, rather than buying a $60 game for a $300 console.  The tablet is the more cost effective route, no doubt.

The bottom line here is that Google and GameStop will both benefit from the Nexus 7 tablet.  GameStop’s favorable pricing options make it a better place to buy than Google itself.  In addition, they may have successfully found their hedge against the video game headwinds which should help them stay afloat during the transitional period.

Disclosure: No positions