Barnes & Noble's Nook e-reader faces substantial competition as it attempts to take market share away from Amazon.coms popular Kindle line, but it could conceivably triumph thanks to a combination of new technology, Google Android, brick-and-mortar stores, and other e-readers such as Plastic Logic's QUE. The introduction of the long-rumored Apple tablet PC could also have a seismic effect on the e-reader market, as well as Amazon.coms and Barnes & Noble's ability to compete in the space.Barnes & Noble's Nook
e-reader will go head-to-head with Amazon.coms Kindle this holiday season.
While the Kindle cornered much of the publics attention throughout 2009, thanks
in part to extraordinarily high-profile launches of its latest models, it now
faces substantial competition from companies that have dissected its business
model.
Two or three quarters from now,
will Barnes & Nobles Nook have managed to eat away at the Kindles
market
lead? Or will Amazon.com succeed in its goal of making "Kindle"
synonymous with "e-reader"? And what will either outcome mean for the
e-reader market
overall?
Barnes & Noble could succeed
in the battle thanks to the following factors:
Other Players in the E-Reader Ecosystem: On Oct. 28, Barnes & Noble announced that it would sell Plastic Logics
QUE e-reader through both its online storefront and in its brick-and-mortar
locations. While such a move might seem akin to Microsoft selling the
PlayStation 3 alongside the Xbox in its new Microsoft stores, Barnes & Noble
evidently sees its own e-reader and the QUE as appealing to different segments:
the Nook to the consumer market, and the QUE to business users.
Amazon.com has touted its
9.7-inch-screen Kindle DX as both a business and consumer device; during the May
6 rollout event, CEO
Jeff Bezos demonstrated how the DX could display everything from legal documents
to ship navigation charts.
By aggressively promoting the
QUEwhich has been touted front-and-center as a device for workers who want to
access Word, PowerPoint and other documentsBarnes & Noble may believe that
it can neutralize Amazon.coms appeal to the business community, while the Nook
takes on the consumer market. Amazon.com would be fighting on two fronts.
Google Android: Barnes & Noble
chose Google Android for the Nooks operating system because the latter was
optimized for running on small screens, such as phones. If the company opens the
Nook to application development, the resulting versatility could open an
enormous advantage over Amazon.coms proprietary software platform. Another
advantage in this scenario would be the Nooks iPhone-style multitouch
screen, which would give developers more of a playground in addition to the
devices e-ink display.
Technology: In May, Jeff Bezos
suggested that a color version of the Kindle was "multiple years away," and that
color displays developed in Amazon.coms laboratories were "not ready for prime
time."
Barnes & Noble, and
doubtlessly other future e-readers, have solved this issue with a two-screen
format: the aforementioned iPhone-style screen paired with the e-ink display.
That adds functionality to the Barnes & Noble devicesuch as the ability to
navigate through book catalogsthat Amazon.com may feel compelled to match. The
Nook also has other features, such as its "LendMe" technology that lets volumes
be shared Nook-to-Nook for 14 days, which help differentiate it.
Brick-and-Mortar Stores: Barnes
& Noble demonstrated during its launch presentation that it intended to
heavily promote the Nook in its stores. While physical storefronts have been
perceived in certain quarters as a liability due to their overhead, the right
leveraging of its retail space could give Barnes & Noble a broad venue
through which to push its productparticularly if they allow features such as
in-store Wi-Fi browsing of text. Unless Amazon.com signs a deal with a big-box
store such as Best Buy, its restricted to online.
Google, Again: Amazon.coms
Kindle site claims a library of 360,000 books. Barnes & Noble,
meanwhile, claims its online eBookstore offers some 700,000 volumeson top of
500,000 free public-domain volumes from Google. For the majority of users, the
actual presence of any books beyond the latest New York Times bestsellers or
certain popular volumes may be academic; but the perception that Barnes &
Noble can technically offer more content may help move units in the newcomer's
favor.
Jeff
Bezos has made public comments that suggest he views Googles digital book
initiatives as a threat. During the Wired Business Conference in New York
City in June, he said that the settlement between the search-engine giant and
book publishers over digital rights needed to be "revisited," adding: "It
doesnt seem right that you should do something, kind of get a prize for
violating a large series of copyrights."
Whichever side gains
market share, though, the increased level of competition could ultimately be
good for the e-reader market as a whole. Although that market remains small
overall, with Forrester Research predicting sales of around 3 million units in
2009, higher prices for e-readers have slowed their rate of market
penetration.
"The cost of the display
component is high and sales volumes are still modest, yet consumers demand and
expect ever-lower prices," Sarah Rotman Epps, an analyst with Forrester, wrote
in a Sept. 1 research report. "E-reader product strategists will have to educate
consumers and innovate to bring prices down."
Following Barnes & Nobles
announcement that the Nook would go on sale in November at a price-point of
$259, Amazon.com slashed the price of the original Kindle device to $259, down
from $279 only a few weeks before. (Because no viable competitors exist yet on the actual market, the
Kindle DX continues to sell at $489.) Other e-readers rolling out in 2010 may
attempt to match or even dip below the big companies price points, which in
turn may lead to another spate of cuts.
Barnes & Nobles focus on
creating an ecosystem, as opposed to centering its e-reader push on a single
proprietary device, has also seemingly had an effect on Amazon.coms efforts.
During the Oct. 20 launch, Barnes & Noble executives touted how, in addition
to the Nook, users would be able to read their e-books on smartphones, the
iPhone and the iPod Touch.
While it already had a Kindle App
for iPhone and iPod Touch, Amazon.com
jointly announced with Microsoft during the latters Oct. 22 Windows 7 launch
that a new "Kindle for PC" application would make its debut with the
operating system. The program would allow users to not only download e-books
from the Kindle store, but also display those volumes on desktops and laptops.
Despite the efforts of all these
companies, the e-reader landscape could also be radically altered if Apple makes
good on outsiders rumors that it will release a tablet PC sometime in 2010.
Rumors of such a device received
added fuel over the weekend, when New York Times Executive Editor Bill Keller
referred to "the impending Apple slate" in an Oct. 16 closed-door speech.
Whether he was referring to an
actual "slate" device, or merely Apples upcoming "slate" of products, a
multi-touch PC with text content downloaded via iTunes would provide substantial
competition to both Amazon.com and Barnes & Noble, particularly since a
tablet PC would present other functionalities that would conceivably make it a
better value proposition despite a presumably higher price.
However the market eventually
turns, though, competition between Amazon.com, Barnes & Noble and
maybe-Apple would present benefits for the periodicals industry, which has been
urgently seeking a technological solution to falling ad revenues and readership.
E-print could offer them a new paradigm for survival.