Dangers of assuming Amazon will destroy B&N

A long time ago I’d joked about the ridiculousness of B&N thinking their new CEO William Lynch could hold a candle to someone like Jeff Bezos who has a very proven track record.

Amazon may very well still destroy B&N – However, B&N has been the more impressive technology company when it comes to eReaders and Tablets. Read on if you find that hard to believe.

I owe William Lynch an apology. He and B&N have done a lot of things that everyone thought Amazon would do first.

B&N’s ability to compete with Amazon

This is some of the stuff B&N pulled off in the last year -

  1. Released a Reading Tablet a year before Amazon.
  2. Released a touch-screen eReader months before Amazon. Almost eliminated the page-turn problem.
  3. Turned Nook Color into the #2 selling Tablet after iPad. You can argue technicalities, but the bottom line is that Nook Color has sold more than any other non-iPad tablet.
  4. Showed that there is a market for non-iPad Tablets. This is a HUGE thing. It has given everyone else hope and will lead to the end of the iPad’s domination in Tablets. The biggest lesson it has taught everyone is – Don’t compete on your enemy’s strengths. A lesson that Amazon has learnt very well.
  5. Released a Nook Tablet that pulls off some impressive things – 1 GHz dual-core processor, 1 GB RAM, HD support, IPS screen, 16 GB memory. That’s a LOT of goodness for $249 – Tablets and smartphones with comparable specifications retail for $400 to $500.
  6. Built up a very interesting Nook Color App Store. 1,100 Apps aimed at Tablets.
  7. Added Email support and lots of other features to Nook Color and morphed it from a Reading Tablet to an almost full-fledged Tablet.

These are all things that no narrow-minded person expects a bookseller to be able to do. Glad to learn from that mistake.

Of course, the two most impressive things are -

  1. It Stayed Alive.
  2. It Built the Nook division into a $2 billion a year business.

B&N could just spin-off Nook into a separate company – Suddenly it’d be a company with a very good chance at surviving and thriving. It could also transform itself into a store that sells everything. It has options and it’s in a position of power.

The Main Stream Press are counting out B&N

Reading through people’s thoughts on Kindle Fire vs Nook Tablet, it’s hard not to notice two interesting assumptions -

  1. Kindle Fire is $50 cheaper and it will destroy the Nook Tablet.
  2. B&N is a bookseller that can’t compete with a software company like Amazon.

The first is an interesting assumption. If it’s the iPad, then the $500 price doesn’t matter because it has better features. If it’s the Nook Tablet, then a $50 higher price will kill it – because price matters so much.

It almost seems that the Press is married to two stories -

  1. iPad’s glory will continue to increase forever – until people use it instead of paper plates and credit cards and kitchen towels.
  2. Kindle’s glory will continue to increase forever – until Amazon is selling Prime subscriptions for pet kittens that come with one free baby mouse a quarter.

The truth is that the Press is constantly wrong – it was wrong about the Kindle, it was wrong about the Nook Color, and it’s likely to be wrong about the death of the Nook Tablet.

$50 is not going to destroy Nook Tablet

Firstly, we have a few million Nook Color owners.

Secondly, we have a few million tech-savvy people who want a powerful Tablet they can hack and run Android on. For them, things like 1 GB RAM mean a lot more than saving $50. They know exactly how valuable that 1 GB is going to be by end 2012.

Thirdly, we have a TON of people for whom $250 is not a big deal but $500 is a big deal. These people will have Kindle Fire and Nook Tablet as options – but not the iPad. Perhaps 75% choose Kindle Fire – that still leaves 25%.

Fourthly, we have lots of small groups that will pick Nook Tablet – people who want/need an SD Card slot, people who prefer the Nook Tablet’s screen, people who love B&N or are B&N members, people who MUST see the device in person, people who prefer the Nook Tablet’s design, and so forth.

There will be millions of Nook Tablets sold.

Nook Color is now at $199

One very important factor is that B&N has now priced Nook Color at $199.

Nook Color is a very solid and compelling device. It’s also battle-tested. While Amazon’s ecosystem gives Kindle Fire an advantage overall (though I haven’t done an in-depth analysis), there are lots of people who will find things like ePub support and expandable memory more compelling.

Neither company is making Space Rockets

There’s a pretty strong bias against B&N. The assumption that because it started off as a bookseller, it couldn’t possibly compete with a company that started off making a website to sell books.

It’s delicious irony.

Tech journalists love to spout nonsense – It’s really, really tough to do hardware. It’s really, really tough to do software.

It’s not. There wouldn’t be 5,000 different companies doing it if it were that difficult.

We aren’t building a rocket or mapping the human genome. We are taking things that have been done thousands of times and refining them a bit. The real problem is that most companies do a shoddy job. They try to provide $10 of value and charge $100.

The tech media says – B&N can’t compete with Amazon.

Let’s add some facts to that statement and see how ridiculous the complete assertion seems:

B&N built a Reading Tablet and shipped it 1 year before Kindle Fire. B&N proved there’s a non-iPad Tablet market. It sold a few million Nook Colors. B&N shipped a touch eReader before Amazon did. B&N has around 20% of the ebook and eReader market.

B&N can’t compete with Amazon.

Dear Tech Journalists,

You are absolutely right. Apart from a few little things like releasing Nook Color last year, building Nook into a $2 billion a year business, and releasing a very impressive Nook Tablet, B&N has shown zero ability to be able to compete with Amazon.

Quite frankly, the tech journalists are just upset that Nook Color was obstinate enough to survive.

There is no purity and there can be no clean endings

What are Amazon’s aims with eReaders and Tablets – expand, sell other things, sell digital products, sell kitchen sinks, sell books, create more Amazon customers, prevent Google from being the middle-man, prevent Apple from becoming the dominant tech religion, profit at some later point of time, grow Amazon, annoy WalMart, beat WalMart with a stick, poke Google in the eye, show Google how to make actual money from Android.

You know what’s missing – purity.

B&N’s aims are pretty convoluted too – survive, offset the decline of brick and mortar stores, compete with Amazon, show Amazon it can compete, evolve, sell books, sell rugs, capture children and families as customers, make fun of Borders, morph into a monster, survive in the digital age.

Again, the purity is missing.

We don’t have any company that is aiming to make the best possible Tablet, with no compromises. If there were, it would wipe out everyone else. Perhaps itself too.

Since there is no purity, there is not going to be a clean-cut winner.

Let’s see why -

  1. Amazon wants to sell other things so it builds a Tablet + mini Amazon Store.
  2. It bundles Prime.
  3. It uses a closed ecosystem.
  4. It focuses on selling other things when it constructs the UI and design. Ratio of Time spent on buying movies UI vs Transferring files to PC UI = 10:1.
  5. It closes off certain formats and certain features. Limited storage has more to do with pushing people to buying Amazon content than saving price. Do we really think Amazon was super concerned about the extra $5 to go from 8 GB to 16 GB?

At every step, it loses a small subset of customers looking to buy a Tablet.

It’s the same with Nook Tablet – However, it is making other cuts. So it’s losing other subsets of Tablet customers.

Because each and every Tablet maker has multiple goals and is lacking purity, we will have a market with multiple winners.

Amazon only knows two directions to attack in

Another factor in B&N’s favor is that Amazon seems to be wedded to two things -

  1. Very Strong Ecosystem.
  2. Very Cheap Device.

There are lots of things it isn’t even attempting i.e.

  1. Aesthetics. It could try to steal away Jonathan Ive – give him a chance to get all the credit and live in England. Let’s admit it – He could design the most magnificent TV ever and people would just say it’s Steve Jobs’ last gift. Jonathan Ive has a chance to show that he was the real genius behind the designs. If he goes to Microsoft or Google or Amazon and designs the next big device, then he becomes the real design genius. Do it in a company other than Apple and everyone will know who’s the man behind the magic. Right now, he’ll be forgotten in all the idol-worship. It’s sad in some ways. All these amazingly talented people like Steve Wozniak and Jonathan Ive and no one will ever remember them because one person will get all the credit.
  2. Validation. Lots and lots of kids who want to show they’re cool. It’s hard to understand that everything you need is inside of you. Let them ease their journey to self-validation by sporting the SuperValidatingKindle_Status++.
  3. Religious stuff. The current crop of technology people seem to be almost feudal in their need to have some Tech Overlord they can bow down to. Provide it.
  4. Social Connections between Readers. Social does not mean Book advertisements on Twitter and Facebook.
  5. Making a Tablet that will be the very best Tablet – even without the ecosystem.

Apart from a golden stretch with the Kindle 3, Amazon has never had the best eReader. It’s always the website and ecosystem that have been the difference makers. It’s the same with Kindle Fire. Silk Browser and Amazon Prime are the difference makers.

It’s as if Amazon has decided to completely ignore Maslow’s Needs Hierarchy and focus only on what it currently knows best – the Cloud and the Website and Scale and Low Prices. Not a bad strategy to focus on its core competencies – but it leaves a lot of opportunities for Amazon’s competitors. Can B&N take advantage of those opportunities?

Well, the solid technology in the Nook Tablet suggests it can.

We have already passed the Inflection Point

We passed the inflection point for B&N’s death with the launch of the Nook Color. Mr. Leonard Riggio must have seen those 700,000 Nook Colors being sold every month and felt Tiger Blood coursing through his veins.

We’re talking about a company that everyone claims is dying and it’s built a completely new business that’s worth $2 billion a year. You know what company would love to be able to do that – Google.

There are very few companies that can build multiple billion dollar businesses. Microsoft, Apple, Amazon, … and a few more. It’s not a long list.

B&N has done it. It’s at around 20% in eReaders and perhaps at 10% to 20% in Tablets. It’s tasted blood. Right now, we are seeing the beginnings of a very long climb up. B&N went through its death rattle and survived. This fact is lost on everyone because people mis-understand inflection points.

If a company has 20% of the eReader market, and has one of only two viable competitors to the iPad – it’s neither dead nor endangered.

Look at the $99 Nook Touch. The $199 Nook Color. The $249 Nook Tablet. These aren’t the product offerings of a company that is on its deathbed. These are products from a company that has survived and is reborn.

Amazon is going to regret not buying B&N. It had a chance to snap up the only credible threat to the Kindle, and it didn’t. Now it is faced with a company that is a threat to both Kindle and Kindle Fire. Amazon is going to have a lot of opportunities to think back to when B&N was almost dead and was available for a billion dollars or so. Instead of buying Zappos and its ‘feel good and sell shoes for no profit’ strategy, Amazon should have bought B&N. You probably couldn’t write a Mother Teresa meets Dalai Lama book about it, but you’d have one heck of a business.

Is Borders’ bankruptcy good for Amazon and great for B&N?

It’s a question worth asking.

Reasons Borders’ bankruptcy is a bad sign for both Amazon and B&N

It shows a weakness in physical book sales and both Amazon and B&N are still heavily dependent on physical books. An aphorism about falling tides and shipwrecked boats would be awfully convenient.

Without physical books there’s nothing to keep book sales from falling precipitously. While there were $20 hardcovers and $10 paperbacks it was easy selling $5 and $10 ebooks. As physical books become less popular, digital book prices will dictate digital book prices and that will mean severe drops in price.

Borders’ bankruptcy affects everyone and everything – grocery stores will wonder whether they should promote books as much, Borders owes tens of millions of dollars to each of the major publishers, customers will have fewer places to browse for books, there will be fewer options for distributors and publishers.

It’s a tough choice – Would you rather be #1 in a business that is booming and where even the #4 and #5 companies are doing well, or would you prefer to be #1 in a market where even a #3 company can’t survive?

The bottom line is that physical book sales are crucial for both Amazon and B&N and Borders’ demise clearly shows that physical book sales are under threat.

Reasons Borders’ bankruptcy is good for Amazon

More people will have to buy books online.

One competitor is gone. A competitor that was selling lots of non-Kindle eReaders and supporting Kobo, which is a very dangerous ebook rival.

It might mean that B&N is under threat. If nothing else, Borders’ troubles might worry B&N into making stupid moves.

It helps increase eReader sales and ebook sales. It hugely speeds up the shift from physical to digital. Publishers and Authors and Customers will start feeling that the future is ebooks.

Reasons Borders’ bankruptcy is great for B&N

Its biggest retail rival is dying. B&N will benefit greatly from book buyers having only B&N stores to go to – At least for the next few years.

Some of the people who choose online will choose BN.com. Some of the people who choose eReaders will choose Nook.

Its power with Publishers will grow immensely.

Nook’s rivals like Kobo will be weakened as Borders slowly dies. 

B&N will be the only retail chain left that has customers of very good intent, i.e. customers who love books.

All the people in love with physical books will gravitate to B&N. They have to – if B&N goes down, their options go down drastically.

It’s very puzzling

It’s almost as if Borders is sacrificing itself so that B&N can do well and make a smooth transition into ebooks and eReaders. If there were any doubts about B&N’s viability and future (and there have certainly been reasons to wonder) – Well, now there’s very little to worry about.

B&N will now get most of the in-bookstore purchases. Nook Color is doing well. B&N should be fine.

It’s also good for readers as Amazon will now face competition from a stronger B&N – forcing Amazon to improve faster. It’s good for Amazon too – a good, healthy competitor keeps you alert and focused.

Wondering about the financial health of B&N

The deep trouble Borders is in makes you wonder how stable Amazon and B&N are, and what the implications might be for Kindle and Nook.

Amazon is in great health, and Kindle ought to be fine

The Kindle has got Amazon behind it, with nearly a billion dollars a year in annual profits, and $14.162 billion in assets. For all practical purposes, there’s little to worry about. In Q3, 2010, Amazon saw its revenues rise 39% to $7.56 billion, and its net income rose 16% to $231 million.

Given the huge assets, the huge revenue flow, and the increasing revenue and profits, there’s little reason to worry about the Kindle’s future. 

There are also the supposedly great Kindle sales – which put Amazon into a great position, where it can make loads of money from ebooks.

What’s the real status of B&N?

2010 has been a very interesting year for Barnes & Noble. On the surface there’s a lot to worry about -

  1. B&N saw losses.
  2. Ronald Burkle tried to buy it, and there was an ownership struggle.
  3. B&N has admitted it’s looking for buyers.
  4. One of the main investors in Borders tried to get Borders to buy up B&N. Apparently, Borders can’t pay Publishers, but it can pursue B&N.
  5. There was lots of talk of B&N struggling, and of bookstores being a dying proposition.

However, it’s important to cut through to the underlying facts. The real financials will give us a much better clue as to B&N’s health, and the implications for Nook and Nook Color.

The Financials reveal a quarterly net loss of $12.6 million

B&N is a pretty stable company. Here are some details from B&N’s Q2, 2011 results (this is for the quarter ending October 30th, 2010) -

  1. Total sales were $1.9 billion.
  2. Sales from B&N College bookstores were $798 million.
  3. Sales excluding College increased 1% – This included BN.com sales increasing 59%, and Toys & Games sales increasing 42%.
  4. EBITDA earnings were $46 million. That’s earnings before things like interest, taxes, depreciation, and amortization.
  5. Net loss was $12.6 million.

That’s not a very big problem.

If your sales are $1.9 billion, and you’re ending up with a loss of $12.6 million, all you have to do is optimize. Turn an extra 1% of your sales into profits, and you’re in the black.

$12.6 million is dwarfed by B&N’s assets and revenue

Here are a few things to consider -

  1. B&N has current Assets of $2.1 billion.
  2. B&N has property and equipment worth $756 million. Note that it’s $2.81 billion minus $2.1 billion in depreciation and amortization. That seems a bit strange – Property and equipment seems like it might be worth more than $756 million. There are 717 stores and over 600 college bookstores. How is that worth just $756 million?
  3. Goodwill and intangible assets of over a billion dollars.
  4. It also has current liabilities of $2 billion, long-term liabilities of $1.2 billion, and shareholder equity of $823 million.
  5. We’ve already covered that it had sales of $1.9 billion in the last quarter.

Not an expert, but it seems that the $12.6 million in quarterly losses is hardly a concern given that B&N has $1.9 billion a quarter in sales, and at least a few billion in assets. This is a company that is unlikely to go under in 2011. In fact, it paid out a 25 cents dividend on December 31st, 2010. 

Even B&N’s market capitalization of $823 million seems low. Low enough that buying it might be a steal – which would explain why everyone from Ronald Burkle to Borders’ main investor wants to buy it

B&N has a $1 billion revolving credit facility, with $627 million still available

From the earnings release -

 At the end of the second quarter, the company had borrowings of approximately $377 million under its $1 billion revolving credit facility. 

The company’s financial position remains strong and the revolving credit facility provides ample room for the company to fund its strategic investments.

$377 million in borrowings isn’t very reassuring. Still, it’s nice to know there’s still $627 million available. B&N is definitely set for 2011, and perhaps for quite a few years after that.

$12.6 milion is dwarfed by what B&N is doing in eReaders and eBooks

The really interesting aspect is what B&N is doing in eReaders and eBooks. Nook and Nook Color are B&N’s crown jewels, and quite possibly 90% of its future.

Here are some estimates and figures -

  1. B&N expects digital content sales will hit a $400 million per year run rate by the end of fiscal 2011.
  2. It’s the #2 eReader maker in the US.
  3. It’s selling half a million Nook Colors a month.

B&N’s Nook and Nook Color business alone are worth a few billion. If Google decided to get serious about ebooks it would have to buy either B&N or Sony’s eReader division.

How much do you think B&N would sell its Nook division for?

Perhaps not at all. Perhaps for a few billion dollars.

B&N’s losses are due to investing heavily in Nook and Nook Color

B&N is seeing losses because it’s put a lot into Nook and Nook Color and into selling ebooks. It’s something it has to do to survive, and is also the smart thing to do – It can’t fight Kindle with physical books. It has, however, fought the Kindle reasonably well with Nook and Nook Color.

B&N mentions that it’s investing heavily in Nook and Nook Color and in ebooks, and that it will continue to do so -

The additional investments are expected to continue and peak during the second half of the year, and then increase moderately in the years ahead.  Payoff for these expenses is estimated to begin to appear in the third quarter, when NOOKcolor is expected to be one of the world’s most sought after eReaders, …

B&N also said it had captured 20% of the ebook market. If it can increase this, the investment will be more than worth it.

B&N is investing heavily in the future of books, racking up some minor losses, and setting itself up for profitability in the future. It’s exactly the sort of thing you’d want a company to do – if you had invested in it for the long-term. It’s also exactly the sort of thing you’d hate – if you only cared about your year-end bonus, or were doing short-term trading.

Why would B&N be considering a possible sale of the company?

Not an expert, so please keep that in mind.

Let’s say you’re mining for copper, and you hit a vein of gold. You start to invest heavily in setting up the facilities to mine for gold.

Your investors go crazy. They don’t think the vein of gold means there’s actual gold – Also, even if there is, it won’t be arriving soon enough to meet their year-end goals from their investments. The way they see it – the profits from copper mining are going into building a gold mine, which isn’t going to pan out soon enough for it to be worthwhile to them. They’d rather get instant gratification and see the profits from copper mining go into their pockets.

So they hammer your perceived value. They start saying your mining business is done. Suddenly, its value is a quarter of what it should be.

What do you do?

Well, it’s a huge opportunity for you – You can kick out all these greedy investors, you can get total control of your company, and you can take your company private so no one knows just how much gold you’re making.

That, in my opinion, is what B&N is doing.

Lots of people feel B&N is just exiting the stock market

This thread at the Nook forum has a lot of people that think B&N just wants to get away from the joke that is the stock market. 

Here’s a snippet of what flyingtoastr wrote -

BN has been investing heavily in digital strategy over the last twelve months. These short-term costs, while costing a lot in the short-term, will end up helping the company remain profitable, and even increase profits in the future.

BN’s move to put the company “for sale” is most likely a move simply to get the company off of the stock exchange and privately held.

IAmBrad also agrees -

Most likely if B&N is sold, it will be done so in a manner that uses either a buyer or buyers that bear a different name, but are actually funded by the current B&N structure.

B&N sees an opportunity to buy itself for a quarter of its real value. It also sees an opportunity to free itself of all the pains of the stock market – market manipulators, short-sighted investors, Sarabanes Oxley, and so forth. It’s a really smart move for B&N to try and buy itself and go private.

Nook and Nook Color are going to be fine. Even in the extremely unlikely case that B&N goes down – they support ePub, and you can switch to Kobo or Google eBooks.

B&N targets Kindle self-publishing, the new Cloud rivalry

In August 2009 B&N had agreed to start distributing Smashwords’ books which are all independent novels. This was a small step to balance the big advantage the Kindle had due to having self-publishing and letting independent authors market their books easily to Kindle owners.

B&N to release PubIt Self-Publishing Platform

Today, Darren Murph at Engadget breaks the news that Barnes & Noble are going to open a self-publishing portal this summer. If B&N stays true to its strict sense of discipline (just ask all the people waiting for its iPad app) that means by Fall 2010 we should see the new platform available.

  1. The self-published titles will be available on the Nook and on all the B&N apps. Engadget wrongly writes that it’ll be available for all eReaders.
  2. It’s going to be called PubIt. Wonder how many Authors are going to interpret that as an excuse to leave the writing and head out to their local.
  3. Come to think of it, it’s not that suprising that the company that brought us Nook would bring us PubIt.  
  4. Details on the split of revenue between B&N and the indie author will be announced in a few weeks – Don’t see how they could go for anything other than 70%. Both Apple and Amazon will be at that split by summer. 
  5. The books will be available in DRMed ePub.
  6. The self-published titles will also be made part of the Free ‘Read in Store’ offer that Nook owners get.
  7. No word on whether lending will be allowed.  

At the B&N website you can sign up to be notified when the PubIt self-publishing program opens.

Is this a threat to the Kindle Store?

At the moment – not much, and probably not for most of this year.

Sometime in 2011 we might start seeing significant sales of independent authors’ books through the B&N store and then the Kindle Store’s position of being the go-to store for indie authors will probably get affected a little bit.

At the minimum we’re talking about authors having to divide their energies and marketing between two ebook stores. Not exactly ideal for Amazon as currently authors only promote the Kindle Store and their own websites.

Google finds a new area to challenge Amazon in – Cloud Services

While the Kindle gets a lot of press and attention (and competitors) there’s another Amazon initiative that’s just as promising – Cloud services.

Amazon stealing the Cloud?

Amazon is doing so well that SmoothSpan Blog wonders whether Amazon is stealing the Cloud and reveals some very interesting details -

A wonderful post on CNet talks about Goldman Sachs’ findings for the Cloud –  

Amazon.com is used by 67 percent of the survey respondents. It is clearly the out-in-front leader, despite being a “newcomer” to enterprise IT.

Platform-as-a-service layers are gaining momentum, dominated by Amazon’s Elastic Compute Cloud, or EC2, service, with 77 percent of respondents choosing EC2 as a preferred partner, well ahead of Google.

It concludes by saying that Amazon has a pretty amazing lead over competitors and they’re building barriers to entry (barriers that sound surprisingly similar to the ones they’re building for the Kindle) -

  1. Nobody has the experience of running Cloud services at the same scale as Amazon. 
  2. For lots of developers their Cloud education is all about Amazon.
  3. Economies of Scale.
  4. Network Effects.  

Well, there’s now going to be another way in which Amazon’s Cloud Services will be very similar to the Kindle – competition from Google.

Google’s Cloud Data Storage for Developers

PC World talk about Google’s Cloud and its competition with Amazon’s S3. In particular -

I’ve heard Google has its sights set on competing head-to-head with Amazon and other cloud-storage providers.

Google is arguably the most iconic representation of cloud-based services–with Amazon as a close second–so it seems only fitting that it seek a dominant role in this arena.

Got to love how, just like with the Kindle, you already have Amazon losing the ‘most iconic representation’ battle. And again, like with the Kindle, the Press are talking about how a rival service ‘promises, very soon’ to be better -

If Google were to incorporate secure, scalable online storage with some of its other services, such as video, or geo-location, it will have a distinct advantage over Amazon’s S3 and EC2 cloud storage services.

On a more serious note this has got to be worrying to Amazon. Google is now trying to steal two of its most promising businesses – ebooks and cloud services. You almost expect Google to announce they’re going to start selling shoes next.

Amazon Vs Google – The 10,000 foot view

Google = Search. Amazon = Buy.

The most efficient model for Amazon involves one where they don’t have to pay a toll to Google for all their web traffic (well, a significant part of it). That’s why the Kindle is a really important channel.

Consider a search for ‘kindle’ – Not only does Amazon have to buy an Ad it has to see Apple buy an Ad, eBay buy an ad, and Wikipedia get the #1 ranking. That’s just terrible from Amazon’s perspective.

From Google’s perspective Amazon presents a few threats -

  1. As Amazon gets bigger and better more and more people go straight to it.
  2. They’d like 90 cents out of every $1 of profit to be spent on Google advertising. 
  3. The Kindle bypasses Google Search entirely. 
  4. Amazon reviews are a better product research resource than almost any site.
  5. Any big website is a threat to Google. Google’s ideal model is to divide and conquer – keep websites small and completely dependent on them.

So, there’s a very natural enmity and we’ll only see it expand into other areas. The Kindle Platform and the Amazon Cloud are the first two battlefields of the Amazon vs Google wars of 2010 to 2020 – it’s going to be an all-out war before long.

Kindle Store Vs Barnes & Noble eBookstore

The obvious question that comes up is whether the B&N eBookstore is better than the Kindle Store. Well, lets review and contrast the two stores -

Kindle Store Vs Barnes & Noble eBookstore – Prices

It’s worth nothing that B&N says that ‘hundreds of bestsellers and new releases’ will be at $9.99.

Looking at prices of random books, we get -

  1. Kindle Store usually has a $9.99 price.
  2. B&N eBooks are either $9.99 or (quite often) at 20% off from list price.
  3. Overall, Kindle Store almost always has lower prices.

Kindle Store is the clear winner on ebook prices.

Kindle Store Vs Barnes & Noble – Range of Titles

B&N definitely has a good range. Looking at the number of titles in each category, not sure how it all adds up to 700K books. It seems more like 150K to 200K to me.

It’s also hard to make out what part of the 700,000 books are free public domain titles from Google. What we can say is -

  1. 2,258 out of the 13,034 books in Fiction and Literature are Free Google Books.
  2. 1,555 out of 4,491 books in Nonfiction are Free Google Books.
  3. 1,176 out of the 2,550 items in World History are Free Google Books.  
  4. 1,007 out of 2,196 History books are Free Google Books.

It seems like the various ebook categories consist of between 17% to 45% free Google books. 

This is a tie with both ebook stores having solid range.

Kindle Store Vs Barnes & Noble – Associate Commissions

Barnes & Noble will be offering 6% associate commissions. This is scary for Amazon – due to low prices of Kindle edition books (often lower than what publishers have to be paid) Amazon cut associate commissions on Kindle edition books.

This lack of associate commissions is an obvious chink in the Kindle Store armor. Lots of blogs and sites that depend on book commissions for staying afloat will, when ebooks become big enough of a market, favor B&N.

Amazon will, sooner or later, be forced to add in commissions for kindle edition books. Although if its picking between lower prices and commissions, lower prices ought to win.

Kindle Store Vs Barnes & Noble – eReader Support

Not until early 2010 when B&N ebooks will be readable on Plastic Logic’s eReader.

Kindle Store Vs Barnes & Noble eBookstore – PC and Mac Support

This is a really cool feature from B&N and hopefully forces Amazon to release Kindle for PC and Kindle for Mac.

We’ve talked about the B&N eReader for PC functionality earlier -

  • It lets you change fonts and font sizes.
  • You can add notes and bookmarks. You can add different color highlights.
  • Auto-Scroll feature for hands-free reading.  
  • There is speed reading (of sorts) using Rapid Serial Visualization Presentation.
  • Kindle Store Vs Barnes & Noble – Mobile Support

    Kindle supports -

    1. iPhone. 
    2. iPod Touch.

    B&N eReader supports the above, and also adds -

    1. Blackberry
    2. They plan to add more device support in the next few months – probably Palm (an obvious choice given the format they use), Windows Mobile, Nokia, and Android.

    This is a clear win for B&N.  

    Kindle Store Vs Barnes & Noble – Usability Review

    My familiarity with the Kindle Store prevents me from being able to answer this. Amazon obviously has a better designed website while B&N seems to be using pictures of shiny, happy people to sell books.

    B&N does not seem to have anything for independent authors, and no blogs, books or magazines.

    Syncing between Devices & Instant Downloads

    Kindle Store books have WhisperSync – this lets you sync how far you’ve read, etc. between your Kindes and your iPhone and iTouch. It’s a really good feature, and so far B&N doesn’t have an equivalent feature.

    Kindle Store lets you buy from Kindle or iPhone or from the PC. B&N lets you buy from any device too.  

    Kindle Store Vs Barnes & Noble – Free Titles.

    B&N obviously has a lot more free public domain books. Advantage B&N.

    Its worth nothing that the Kindle conversion process will convert free Google Books to kindle format.

    Kindle Store Vs Barnes & Noble – Openness and Format

    1. B&N ebooks are supposed to support ePub at some point of time. They currently use the eReader .pdb format.
    2. Kindle Store uses its Topaz and AZW formats which are encrypted and not usable on any other eReader.
    3. Here’s what happens when you try to convert the Barnes and Noble ebooks (which are in the encrypted .pdb eReader format) to PDF –

    If B&N uses ePub they will gain a big advantage.

    Conclusion: No real threat until Plastic Logic eReader is released

    There is no eReader to read B&N ebooks on. This means that, at the moment, there is little impact on Kindle and Amazon.

    Two big developments to look forward to  -

    1. ePub support. At that point non-Kindle eReaders will suddenly get a lot more content.
    2. The release of the Plastic Logic eReader. At that point a viable Kindle competitor will combine with a viable Kindle Store competitor to create the first actual threat to the Kindle.

    Regardless of how Kindle Store Vs Barnes & Noble eBookstore turns out (my money is on Amazon), the entry of B&N is really good for ebooks.

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