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UK's Argos undercuts Tesco with 99.99 pound tablet

LONDON (Reuters) - Britain's Argos has entered the intensely competitive tablet computer market with a 99.99 pound ($160) own-brand product that is 16 percent cheaper than one launched by Tesco, the UK's largest retailer, last month.

Argos, owned by Home Retail, said on Tuesday its MyTablet would be targeted at teenagers, taking on a market dominated by Apple, Samsung and Amazon.

Tesco sold 35,000 Hudls in two days following its September 30 launch - the fastest-selling tablet launch ever seen at the retailer. Argos is keen to tap into this growing segment as part of its reinvention from a catalogue-led to digitally-led business.

Home Retail has posted five straight years of profit decline and hopes the change of direction for Argos will result in a 15 percent rise in sales to 4.5 billion pounds by 2018.

Like Tesco's Hudl, which is priced at 119 pounds, Argos' MyTablet has a seven-inch screen, runs Google's Android operating system, comes with pre-loaded apps and is enabled for internet browsing, TV, music, video streaming and social networking.

However, MyTablet only has 8 gigabytes of standard memory compared to 16 on the Hudl. It also has a lower resolution screen, an inferior battery life and is only available in two colours versus the Hudl's four.

Both devices will compete with Amazon's Kindle Fire, which retails for 99 pounds, Google's Nexus 7, which costs 199 pounds and Apple's iPad mini, which sells for 269 pounds.

"Millions of people have bought tablets during the last year but there is still around 75 percent of the UK population without one," said Argos managing director John Walden.

Market research company EMarketer estimates there are 19.7 million tablet users in the UK, up 39 percent year-on-year.

Both Argos and Tesco sell a range of branded tablets.

Sebastian James, CEO of Dixons Retail, Europe's second biggest electricals retailer, said last month that although there is a market in Britain for cheap, basic tablets, consumers were often left disappointed by purchases.

"We get a lot back because people use them and they say 'no, what I wanted was an iPad' and they are not," he told Reuters.

"There's a reason why an iPad is more expensive, it's just better."

($1 = 0.6271 British pounds)

(Reporting by James Davey; Additional reporting by Paul Sandle; Editing by Sophie Walker)

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