I was disappointed to read that B&N’s Nook business was basically flat year-over-year. How could that be in such a red hot market? Ebook sales are skyrocketing and everyone seems to be buying new devices.
The more I think about it though the more I realize that B&N’s results are consistent with other data points we’ve seen this year and part of a broader industry trend.
Does anyone remember Amazon’s results from earlier this year? We all got distracted by their financial loss and how it was viewed as part of the longer-term plan to become the next Walmart. The Kindle Fire was coming off a hot holiday season and Amazon was poised for even more growth. The truth here is that the Fire’s spike was short and sweet. And according to this chart, although 22% of those surveyed last November said they were going to buy a Fire that number dropped all the way down to a paltry 8% by May.
If interest in the Fire is waning does that mean more people are simply buying eInk devices? Apparently not. Look at the figures towards the end of this article to see just how soft interest is in Kindle eInk devices. And as this other article points out, “instead of driving would-be Kindle buyers to spend a bit more on a full-color tablet with apps from Amazon, it may have driven them to buy iPads.” That sounds like a great definition for “unintended consequences.”
What does all this mean? I’d say there’s an even greater sense of urgency for Amazon to revive interest in their tablet platform, especially with all the rumors of Apple’s upcoming iPad Mini. After all, that’s the gateway to their Prime membership and all the other products they have to offer, where their real profits are made. That’s also a key distinction between B&N and Amazon. The latter sells just about everything while the former is still basically a bookseller. It’s also why I figure Amazon is even more willing to be a loss leader with books as long as they get that Prime-enabled tablet into as many hands as possible. Where will that leave B&N? How long can they compete if Amazon is able to use ebooks as the loss leaders for their larger store?
What do you think? Can Amazon or B&N really compete in the device world? Are ebooks nothing more than the razors Amazon wants to give away (or sell at a loss) so they can get consumers to buy all those profitable blades from the rest of their catalog?