We’re delighted that there seems to exist a thriving online community of Nook fanboys, ready to pounce on every critical article written on the product. Many of them took to the comments (and Twitter, and our email…) to explain how wrong, wrong, wrong we are. We still respectfully disagree.
First, a couple concessions. Yes, the Nook e-reader has actually been selling pretty well — anything else would’ve been surprising given how heavily B&N marketed it in store. And yes, the Nook’s e-book store seems to have a good selection — although this has more to do with publishers scared of Apple and Amazon hedging their bets than anything intrinsic to the Nook. We didn’t mean to imply otherwise in our post.
With that in mind, here are, as best as we can tell, the main arguments in favour of the Nook:
- “I love my Nook!” And we still love our old Amiga, but that didn’t make it win the PC platform wars of the 80s.
- “The Nook is compatible with the epub format, and not the Kindle!” Ok, fair enough. But how much does the average consumer care about that? How many people in the world know what “epub” is? And if it’s really that important, how hard would it be for Amazon to add it?
- “You’re just an Apple/Amazon fanboy!” Well, Apple and Amazon just happen to be extremely disciplined, phenomenally successful giant companies with very deep pockets led by visionary Founder/CEOs who think in decades, not quarters. Barnes & Noble? Not so much.
- “It’s too early to tell who will be successful!” That’s actually a really good point. The e-book market is still nascent and fluctuating, and it might be too early to make such bold predictions. But it might not be.
That said, we still think the Nook is doomed.
Because it seems increasingly likely that this market is a platform market. The goal isn’t to sell hardware, it’s to become the platform on which books are published and sold. And platform markets have something called network effects. A network effect is what happens when a product or service is more valuable the more people use it. And what usually happens is that one player takes the vast majority of the market, like Microsoft with operating systems or Apple with iTunes.
The more readers of one platform there will be, the more publishers and authors will want to be on that platform and give preferential terms to that platform. And the more that happens, the more consumers will go to that platform. And the more consumers there will be, the more publishers and authors will want to be there. And so on and so forth. Right now all platforms have good selection mostly because publishers are afraid of being squeezed by e-books and are trying to hedge, but ultimately, that’s how all these types of markets shake out.
Companies in markets with network effects would do well to remember the motivational advice from Glengarry Glen Ross: “As you all know, first prize is a Cadillac El Dorado. Anybody want to see second prize? Second prize is a set of steak knives. Third prize is you ‘re fired.”
Do we think the Nook has a chance at edging out Sony to become number 3? Yeah, probably. But number 3 is the same as number 333. Do we think Barnes & Noble can out-design, out-market, out-distribute Apple and Amazon? Probably not.
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