I need to make sure everyone understands up front that I am not a stock analyst, and anything I say is not intended to be any kind of a security recommendation. Okay, now with the legal safeguards out of the way, here are my opinions.
B&N has three product segments: bookstores, online books, electronic readers. Each has separate competitors, but one key differentiation B&N has over some of its competitors is that it has all three. Amazon does not have its own stores. Many tablet manufacturers don’t sell books.
Earlier this year, B&N announced a deal to partner with Microsoft on its Nooks. This introduces needed financing for B&N and provides Microsoft with stores where it can sell its products (an attempt to compete with Apple stores).
Prediction #1: dedicated e-readers will go the way of cars without A/C. While migrating from my northern home to southern this year I either left my Nook inside the house or (what I suspect) I put it on top of the car as I was loading the dog into the car, and it’s lying somewhere along the side the road. I liked my Nook a lot, but with a few free apps a tablet can do just about everything a Nook can, plus it can do a whole lot more.
|Jim's Tablet with Kindle and Nook apps|
Jan received a Kindle Fire tablet for Christmas and uses that as a reader plus. My son also has a tablet. Based on their experiences, I decided I would be better off with a tablet than repurchasing a Nook. I bought a Google Nexus 7 because I like reading in bed and a 7” screen is better than a larger tablet for my purposes. I’m delighted. I recently showed it to my mother who has an old Kindle and an older Nook; now she wants a tablet.
The Amazon Kindle makes you download third-party software in order to get a Nook app. If B&N opens up its operating system to make it easy to read Kindle books (and other formats as well) it will have a key selling point against the Fire. If it keeps a closed architecture, I predict it will go the way of the dodo. B&N should brand the Nook as THE device to use if you are a serious reader, regardless of reading platform, and they should allow an open operating system so users have unlimited app alternatives.
Prediction 2: B&N bookstores will ALSO sell books. Retail space is all about turnover, and bookshelves are terrible when compared to other things related to books. B&N has already eliminated shelf space to put in cafes and areas where dedicated Nook specialists assist you in choosing your Nook and helping you with technology issues. I suspect this will be expanded to other Microsoft tablets with staff similar to Best Buy’s Geek Squad to help buyers sort through the possibilities. In short, if B&N is to succeed they will need to add customer service as a buying differentiator to Amazon’s Kindle.
Apple, of course, already has stores to sell the iPad. The B&N difference can be to provide an open architecture rather than being locked into the Apple (or Amazon) brand. (Not that the Apple brand won’t continue to do well, but across the world, more people will look favorably at Android and Windows 8 operating systems and companies who do not limit how you can use your electronic device.)
Prediction 3: Unless B&N improves its online experience, it will become increasingly irrelevant in the book business. B&N failed where Amazon succeeded in becoming a shopping portal. However, it could still succeed by providing focused positive experiences to readers and authors. To compete with Amazon they need to provide something better than what is currently offered. On Amazon it is fairly easy for an author to add book reviews, additional information, cross-link books, etc. Not so on B&N. However, Amazon is not perfect. For example, it is difficult for authors to link books written under different names. Currently at B&N I can’t even get them to upload an image for my bridge book. (The “problem” they claim is that it is published by the world’s largest publishing company for bridge books, which happens to be in Canada.)
Amazon’s whole approach is to be the low-price provider. If two organizations try to play the same low-price game one goes bankrupt. Amazon has the far-deeper pockets, trying to beat them on price will not work for B&N. Instead, B&N could make its website the “go to” place for learning about authors and find ways to differentiate itself by providing additional content.
While I think the path is clear for B&N to succeed, here’s my final prediction: By 2020, B&N will no longer be selling books. The electronics division will be spun off and subsequently purchased by another tablet manufacturer.
What’s your crystal ball say?