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Why Barnes & Noble will never be great again
October 28, 2011 | 9:06 am
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By Paul Biba
That’s the title of an article in Daily Finance by Arick Aristotle Munarriz. After saying that B&N has had “another dreadful quarter” he goes on to say:
Pollyannas will argue that Barnes & Noble gets it. Unlike Borders, which begrudgingly warmed up to the more obscure Kobo reader, the superstore still standing has sacrificed its fragile balance sheet to make one final wager on the Nook.
Two years ago, Barnes & Noble may have felt that it could win a price war, but Amazon never blinked. The Kindle can now be had for as little as $79, far less than the entry-level Nook at $139. The Nook Color — a real game-changer as a quasi-tablet at a compelling $249 price point — will be clearance-bin fodder when the slightly superior Kindle Fire hits the market at $199 next month.
Barnes & Noble only had a quarter of the market before the Kindle dropped its price into the single digits and the Kindle Fire raised the bar on what a sub-$200 tablet can do. How much smaller do you think Barnes & Noble’s market will get, especially as well-read Nook owners realize that the chain may not have the financial stability to last a whole lot longer if the deficits continue?
Barnes & Noble is in a lose-lose situation. If it slashes its prices to remain competitive, margins will get even worse. If it doesn’t respond, it’s back to relying on its fading superstores for a slower death.
I’m sorry, Barnes & Noble. Every page I turn leads to Chapter 11
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Except, they have the one thing that enables them to sell Nooks in droves….a storefront. Believe it or not there are millions of people who have never even heard of an e-reader and if they are readers, every time they enter one of the few big box book store chains that is left they are offered the opportunity to play around with it and talk to knowledgeable people about the product. I wouldn’t count BN out of the game yet.
Very good point, Helen.
I am a faithful nook user, and as long as B&N exist I will be for one strong reason: backwards compatibility. I have been reading ebooks for a very long time, and have a rather sizable ereader.com and fictionwise library. I see no chance of those books ever being supported by an amazon device.
Can you say “Orphan”? How is B&N going to compete with the Kindle Fire and cheap Kindle’s? Sure, the older customer may feel comfortable being able to touch the Nook, but that market is a limited one and will not stop the corporate bleeding. I mean, how smart do you need to be to run a Kindle or Nook? Most of us can do it without a demonstration, but if one is needed, head over to Youtube for hundreds of such demos.
John, your statement “I see no chance of those books [ereader format] ever being supported by an amazon device,” although true, is…not a particularly good reason to remain loyal to B&N. Except for the original, discontinued Nook, B&N does not have a device that supports its own pdb format. This, most likely, will not change. If you have Fictionwise pdb books, you will need to break the DRM to convert them to a non-discontinued format if you wish to read them in a newer device.
Timothy,
I know and understand that completely. I have a 1st gen Nook 3g. As of right now, it does everything I need it to do. As long as the unit itself is still functioning, I am happy. I imagine that at some time in the future, I’m going to have to break and convert, but until I get there, I’ll be a nook guy.
John,
Fair enough.
Also, B&N is in a hole because their nook ebooks can only be read on a nook device even though ePub. They can’t even sell their books to people with other epub readers. Kobo can. I think watch Kobo as the future competitor of Amazon. The new Kobo Vox similar to the Kindle Fire and Nook Color is priced at $199. Kobo has more international coverage than does B&N. B&N going nowhere in that arena. Kobo is getting into epublishing. And little things like customer service–i.e. want to give a specific ebook as a gift to someone? Only Amazon Kindle and Kobo for epub has it set up so you can do it and easily. B&N is sluggish, lacks innovation and is really bogged down with the bricks and mortar. Yeah, they had a nice flare of excitement with the Nook Color but they need to deal with that price or it is a flash in the pan.
A P.S. to that–I stopped buying B&N nook books for my 1st gen nook. If I buy epub I do so from Google eBookstore or Kobo so that I can use the epub on other epub readers including my current nook.
Barbara: “B&N is sluggish, lacks innovation and is really bogged down with the bricks and mortar. ”
Amen to that.
I can understand how B&N probably feels the need to not be held hostage by other hardware manufacturers, but I’d like to see them get out of the hardware business and Sony get out of the bookselling business. If B&N used compatible DRM then they’d find that their market would open up considerably.
B&N has licensed its DRM to Adobe. And support for the B&N DRM is included in the latest Adobe software. That is why there are several software ePub readers that include B&N DRM support.
Unfortunately manufacturers like Sony and Kobe have chosen not te enable B&N DRM support on their latest ereader devices.
You don not need a Nook ereader device to read B&N ebooks. There are also Nook software ereaders for PC, Mac, iOS and Android.
Also the next version of Adobe Digital Editions will support the B&N DRM.
Hmmm . . . single digits? When did the Kindle start costing less than $10?
Also: @John – the current nooks don’t support our old eReader and Fictionwise books anymore. Granted, B&N’s ownership of those companies means there’s a shot we may see them rereleased as epub or other open formats, but for now B&N appears to be mostly abandoning the eReader and Fictionwise audience.
@everyone: I also have dozens of eReader books going back over a decade and switched to a nook from Sony to support them. While I’m disappointed that my eReader books are unreadable again, I’m glad that my Sony books continue to be read on my nook, and I continue to buy books at non-B&N sources, something I could never do if I had a Kindle.
Kerry,
I do know that, and it’s a shame. That’s one reason why I’m very happy that the battery is replaceable. I’m hoping to get many years out of this nook.
B&N’s problem isn’t vision or strategy or even management; it is lack of resources.
The failure of the original Liberty Media deal left them racing the clock to grow their online revenues faster than their B&M revenue declines before their Liberty infusion runs dry. Beyond what the financials might say, recent management actions and public comments suggest things are getting mighty hot in the kitchen. And the staff is getting testy/whiny. Not exactly evidence of a company doing gangbuster business.
Oh, and as to B&N’s ability to leverage their storefronts to sell Nooks?
That “advantage” dissipated a year ago: Kindles are readily available at Radio Shack, Staples, Office Max, Best Buy, Target, and Walmart, among others. That’s north of 10,000 storefronts. And that is just in the US.
Just about the only place you can get Nooks without seeing and touching Kobos, Sonys and/or Kindles are the few hundred B&N superstores.
Basically, unless B&N finds more money to play with, soon, next spring is going to be “deja vu all over again.”
Word is, they’re making a move Nov 9. It had better be a homerun. It might be their last as currently constituted.
Whoops! Make that Nov 7.
Still needs to be a homerun, though; the storefronts are bleeding them faster than Nook can feed them. They may yet miss the money spent buying up the Borders IP.
@Felix
“That “advantage” dissipated a year ago: Kindles are readily available at Radio Shack, Staples, Office Max, Best Buy, Target, and Walmart, among others. That’s north of 10,000 storefronts.”
I would suggest that you consider the purchase experience of walking into a B&N to purchase a Nook, vs going into a Best Buy (or Staples, or Walmart) to purchase a Kindle. For non technical people there is a night & day difference.
@Jim Lester: You would expect so. But my purely annecotal experience, sadly, doesn’t bear it out. Still, even if all B&N employees were in fact knowledgeable and dilligent in promoting Nook, they can only do so to existing B&N customers. Peope who *chose* to walk in to a bookstore, for whatever reason.
Placement in relevant but not book-focused retail outfits offers the opportunity of “drive-by” impulse sales as well as subliminal marketing benefits; if non-tech potential buyers (many of which already mistakenly think ebook reader = kindle) see kindles for sale everywhere, the thought will stick that Kindles are everywhere because people everywhere are buying Kindles.
(A common feedback effect in consumer electronics; at one time everybody bought Playstations because everybody bought Playstations. Running with the dominant player was safer and the more people bought in to that ecosystem, the more attractive it became to content producers and to trailing edge buyers.)
Ubiquitous availability facilitates “ubiquitous” sales. If nothing else, each reader display in a store somewhere is a billboard, building up brand awareness.
Let’s not forget B&N correctly identified the need to showcase ebook readers in places other than ther website and storefront, so *they* clearly believe they need to reach out to more than just the faithful, a thought Amazon agrees with, even though *their* faithful are more numerous.
Quality of sales venue matters, but “quantity has a quality all its own”.
And, in the US at least (B&N’s sole market) ebook reader adoption for recreational reading very likely doesn’t have much easy growth left after this xmas season. The inflextion point of the adoption curve isn’t far off so future growth is going to be increasingly tied to trailing edge, me too, adopters.
Impulse buys are going to be very important in the recreational reading domain starting right about… now.
That’s just my read, of course.
We’ll see how it all plays out by next March.