Barnes & Noble’s (BKSS) Nook seems really cool. But when you’re third to market, life is harder.
Every single mention of your product is also PR for the #1 – Amazon’s Kindle – most vividly in the form of a matrix of “Nook has” vs. “Kindle has”. Check out their site – they have their own. Think what it’s like when you read a review of Zune or Replay TV or Blockbuster Online or a Ford Focus Hybrid or Ted by United. This is worse because there was all this halo out there when Mr. #1 launched — all the “will it work?” “Oprah likes it” “there is something new out there!” “how innovative…” articles — that went exclusively to Mr. #1.
The “ecosystem” has started running away from you. See how many Amazon (AMZN) titles are on Kindle – 350K, and publishers like the NY Times. You don’t see mention of those on B&N’s site. You see 500K old books, which is neat but it’s not what people read. Those licenses are hard for Amazon to get, they have been wielding tons of bookselling clout for 3 years to get them, and I promise you that B&N will not get them on the same terms. iTunes store is not a commodity. They get the best stuff first. Same for Netflix streaming.
You reach for slightly crazy stuff to impress. That colour touchscreen is nifty, and Amazon’s “it’s wireless”, “now we have a big one”, “now we have a GSM one” is kind of boring really, but Amazon is obviously designing to real user needs and covering the gameboard. B&N is fiddling around with goofy stuff that might just be crazy enough to work. Think of those beautiful pictures on Bing.com or M$’s cashback program. There is no felt need in search for nicer wallpapers. Or, to pick on Apple, the video-in-iPod-nanos thing is another example of using goofy stuff to add sizzle to something un-different (in this case they are competing against last year’s 100% excellent iPod nano models)
Price – ouch. B&N launched nook at $259. I betcha they weren’t planning that till Amazon goosed the price on Kindle last week down to $259. But that screen (the touch LCD!) and the wifi and the low initial volumes…those things are expensive. Looking at the gadget I am certain they lose money every time they sell one, and they will lose oodles if they manage to get it into a third-party channel/retailer (b/c they have to pay margins). Mobile devices with much smaller, more conventional screens that run Android have bill-of-materials-cost north of $259. This bad boy is likely worse.
Channel space is scarce by the time you arrive. You know who the #1 online electronics/gadgets retailer is? Not Barnes & Noble. And Best Buy appears to be giving room to Sony (Mr. #2) this fall. So where is B&N’s gadget going to be? Book stores? Perhaps this sounds logical to you, but we did a little research at Peek on who buys what. And “the literate” is not the target market for e-book readers.
In this case, the unlucky nook is not from a mighty cosmic power like Google or Microsoft where you might say “well, they can overcome anything” (though they can’t), so the verdict is especially clear in this gadget guy’s book: nook is toast. Sony’s got a better shot of making it for a while.
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