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Barnes and Noble, what’s the game plan?

Amazon's launch, Judge Cote's decision and an uninspired B&N add up a one-horse race

Do you suppose that trademark grin on the side of every Amazon box will get a little bigger now, maybe even showing some teeth?

The countdown has begun. Two noteworthy things happened yesterday. First, Amazon introduced a slew of new Kindle devices. Nothing revolutionary but some nice new features nonetheless. Second, and more importantly, Judge Cote approved the ebook settlement. I tend to think Amazon is probably more psyched about the latter than the former. After all, this means they can use their deep pockets to sell ebooks at a loss (OK, make one dollar of profit for each imprint) and drive the competition out of business.

It’s a victory for consumers, or so we’re being told. So what’s B&N, the #2 player, going to do now? Can they really match Amazon on pricing for very long? I don’t see how. And what’s the “why-to-buy” for a Nook anyway? I bought my Nook with GlowLight because I wanted to support the underdog. I’m in the minority though and I’m pretty sure yesterday’s developments will make it even harder for B&N to win over more new ebook/device customers.

Since there’s not a lot of innovation happening with these devices and platforms I figure B&N only has one option left. It’s the step some of us thought Amazon would take yesterday but they didn’t: Take a page out of the cell phone business and offer a low-end device for free that comes with a longer-term revenue commitment.

Remember this old line?: “Nobody ever gets fired for buying IBM.” There’s a similar belief that’s rapidly growing in the consumer space: “Nobody ever regrets buying Amazon/Kindle.” After all, you can get plugged into the $79/year Prime membership program and buy just about anything effortlessly, you get access to all those free ebooks, video, etc. Why wouldn’t someone buy a Kindle device?

The bigger question B&N has to answer is: “Why would someone want to buy a Nook over a Kindle?” If B&N doesn’t act quickly and with a really agressive campaign it’s clear their ebook market share will decline.

What do you think? Is the door rapidly closing on B&N’s opportunity to be a leader in the ebook space?

P.S. — Maybe the ideas I suggested in this earlier post aren’t so crazy after all.

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Comments: 5

  1. I agree, B&N is eerily. It’s been 4 months since the announcement that Microsoft was investing $605M in B&N and it should take this long to figure out how to spend that money. And, B&N’s stock price didn’t seem to like the Amazon/Bezos show: Bks down over 2% to as sad $11.81 a share.

    • That’s right. I would think they’d have more of a sense of urgency in laying out the strategy, particularly when it comes to this NewCo venture with Microsoft.

  2. I think the only survival plan for B&N is to focus on and dominate a niche. I don’t see any way in which they can compete with Amazon. Even if they tried the “book club” approach, Amazon could easily beat them. How about a free Kindle if you agree to buy 6 Kindle books in the next 12 months? Plus, Amazon has better customer data than anyone — they already know who the avid readers are, so could simply give Kindles away to those users, knowing they will use them.  

    I think the option for B&N is to focus exclusively on the education and children’s market. They dominate college bookstores and also in the children’s book market. It’s time to double-down and cede the bestseller brick & mortar biz to Wal-Mart. Two years ago I suggested that Blackboard should acquire them http://www.contentmatters.info/content_matters/2010/08/who-might-buy-barnes-noble.html I think the rationale is even stronger today.

  3. I just read Mary Jo Foley’s latest post about Microsoft’s GatherReader initiative (http://oreil.ly/PPsky5). Wouldn’t it be cool if B&N could leverage that kind of technology in their NewCo venture with Microsoft? Watch this video for some pretty nifty UI features: http://youtu.be/fbsN5WlAank

  4. Barnes and Noble is schizophrenic and that’s what’s really hurting them. If they push eBooks, they lose in-store sales. If they push in-store sales, people like me will avoid them because I’m all-eBook all the time.

    Their eBook purchasing mechanism is awkward and inconvenient. They seem never to have heard of the phrase “shopping cart.” Each book MUST be confirmed separately instead of loading them up and confirming purchase(s). THIS is the firm which bought (and is destroying) Fictionwise, which did it right, shopping cart and all, for years before B&N bought them.

    Add in the inconvenience of DRM, and all I can see is a firm throwing itself under the bus.

    If they’d learned from Fictionwise’s approach, they would have had a chance. I can state with authority that at least one Fictionwise customer used to spend over $2000/year there. But B&N lost any opportunity to be even an also-ran in the eBook space a long time ago, given the way they treat their ebook customers. It’s been three years since the Nook came out and I have yet to hear of a “buy and load your Nook” kiosk in any of their stores.

    With their disastrous failure in ebooks, their brick-and-mortar arm will fall, as more and more of us move to eBooks and go looking for convenience and customer friendliness.

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