Wondering about B&N's strategy, especially Nook Color, Nook Study, and Nook Kids

The Kindle might have won the first few eReader Wars (War for Book Readers in 2009, War for Book Readers in 2010) – However, a few recent observations have been making me wonder whether B&N has a more effective long-term strategy.

A strategy it has been forced into because of Kindle’s excellent success in books.

Is the Nook Color built specifically for Children’s Books?

If you look at the retail box of the Nook Color, you notice something rather interesting about the Nook Color displayed on it –

  1. There are 3 books displayed in the top row (on the screen of the Nook Color on the box). 
  2. The second row on the screen has 2 magazines and 1 newspaper.
  3. The third row is 3 children’s books.

That, in a way, signifies the focus of Nook Color – Books, Children’s Books, Magazines, and Newspapers. Or, to view it in terms of target demographics – readers, parents, magazine readers, and newspaper readers.

Nook Color is undoubtedly better for parents and magazine readers. It represents a big shift from Kindle and Nook, which were both great for books/readers and terrible for everything/everyone else.

Nook Kids highlights B&N’s focus on parents and children

It’s not just that B&N has built Nook Color with a view to capture the children’s eReader market. It’s also released an iPad app specifically aimed at children. It’s called Nook Kids and there are already 100 books available for it – all of the read-along and picture-book variety.

If you go to B&N’s NookKids section on its website, there are books for various age groups – Up to 2 years, 3 to 5 years, 6 to 8 years, 9 to 12 years. The books include classics like Curious George and Thomas the Fire Engine. There are both picture books and read to me books.

Perhaps most interesting is a section called ‘Mom Favorites’. B&N is clearly targeting parents.

Nook Color is the #1 eReader for parents

If you’re a parent, there’s little doubt what you’ll pick – either Nook Color, or Nook Kids for iPad.

B&N might be behind Kindle in books. However, in Children’s books it’s far, far ahead. Not only does it have an iPad app tailored for kids, its reading tablet, the Nook color, caters to parents and children as one of the main target demographics.

And all those kids will grow up with fond memories of Nook Color, and with their books locked into B&N’s special format.

Getting tired of writing this – If Amazon doesn’t release a Kindle Tablet soon, it’ll be in a lot of trouble.

B&N is going after the textbook market too

B&N has Nook Kids and Nook Color to go after parents. It also has Nook Study to go after the textbook market and students.

Nook Study = B&N going after another demographic Kindle has ignored

Amazon did do university trials with the Kindle DX. However, the DX wasn’t really built for students – note-taking was horrible, there were very few features built for students, there were no page numbers, there was no color or touch.

Nook Color is much closer to the type of textbook eReader students would want – although with a screen that’s too small. However, it isn’t Nook Color that B&N is using to go after students – It’s Nook Study.

The Nook Study hard-sell

Got an email from B&N about Nook Study, and here’s what they’re advertising –

  1. The 132 free textbooks from Kaplan.
  2. Save up to 60% on eTextbooks.
  3. Nook Study for PC and for Mac. Features advertised include – ability to take and share notes, search, customize highlights.
  4. Free $5 gift card if you rent a textbook by January 21st.
  5. Save 90% on used textbooks, and 30% on new textbooks.

Visit the site and more things hit you –

  1. B&N is offering eTextbooks free for 7 days.
  2. It’s offering access to 1 million free books.
  3. It’s offering a College Kick-Start Kit.

The software itself is pretty well done. In fact, it’s downright impressive. Nook Study is a very decent option for eTextbooks – All that’s needed is an iPad app and a 10″ Nook Color and B&N will suddenly be in prime position in the War for Students.

637 B&N College Bookstores

B&N has a great channel to advertise Nook Study, sell the Nook Color, and (in the future) sell the 10″ Nook Color- its 637 college bookstores.

Which means that all it has to have is a textbook Reader and a textbook reading app that are as good as the competition – From there its retail channels will give it the win.

B&N is better placed than Amazon in Children’s Books, and might be better placed than Amazon in Textbooks

Let’s consider three separate wars that are part of the larger eReaders Wars –

  1. The War for Readers and Books – Amazon is clearly the leader here.
  2. The War for Parents and Children’s Books – Nook Color and Nook Kids give B&N a lead here. In fact, Amazon isn’t even trying much in this area.
  3. The War for Students and Textbooks – Amazon tried to sell a general eReader to students. B&N is selling a reading app, and has 637 college bookstores. They’re about even. Whichever company is the first one to release a reasonably priced textbook reader, one that’s built from the ground up as a textbook reader, is likely to win.

These are 3 of the most important wars making up the greater eReader Wars. We have others like the War for Magazine Readers and the War for Newspaper Readers. However, these three are amongst the pivotal ones.

That does leave a fourth war and a fifth war – the War to replace Paper with an eReader+eWriter, the War for the Enterprise. Amazon and B&N are not fighting those wars at the moment. There might be others.

For the 5 huge wars that make up the core of the eReader Wars –

  1. Amazon has almost fully won one (books).
  2. B&N is set to win one (children’s books).
  3. There’s a third (textbooks) that’s just starting off.
  4. There’s a fourth (eReader+eWriter) which neither company seems inclined to fight.
  5. The fifth war (Enterprise) is still far off.

If you consider the huge importance of getting children and students on to your platform – the War for Parents and the War for Students might end up being far more important than the War for Readers.

Are we going to see any new eReader companies in 2011?

The Kindle, the Nook, and the Sony Reader are the Big 3 eReaders in the US.

It’s surprising that Amazon, B&N, and Sony are the only big companies selling eReaders in the US. For a market where the #1 eReader is supposedly selling 8 million units a year, there’s a surprising lack of competition.

Will that change in 2011? Are we going to see any new eReader companies enter the market?

Well, let’s list out the usual and unusual suspects, and see which, if any, are likely to release an eReader in the US in 2011.

Companies that might release an eReader in 2011

As it turns out, there are a surprisingly large number of companies that might enter the eReader market. Perhaps Amazon is right to hide Kindle sales figures.

Google – A Google eReader is inevitable

This is a company that’s buying its own fiber, bidding for wireless spectrum, building undersea cables, releasing its own phones, and releasing its own laptops. Any market that seems worth a shot seems to get an offering from Google.

Add on the fact that books are one of the few markets where Google has shown a very un-Google like focus – It’s digitized millions of books, been in and out of Court more than O.J., and launched both Google Books and Google eBooks. If a company like Google, that tends to kill off most product experiments in a few years, has stuck with books for this long, there’s a very high chance it’ll go all-out and build an eReader. 

It’s almost inevitable that Google releases its own eReader. At worst, it’ll get HTC or Sony to release an eReader for it. It might try to buy Sony’s eReader division – Perhaps it even attempts to buy Nook and Kobo.

A Google eReader is inevitable – We just don’t know whether it’s going to release one itself, have HTC release one for it, or buy the eReader divisions of one or more of Sony, B&N, and Kobo.

Apple – Steve Jobs might decide that he wants tens of millions of eReader sales a year

Killing off the Kindle, or at least slowing it down, is strategically very important for Apple.

Amazon causes problems – it got rid of DRM in mp3 files and forced Apple to match, it sells digital games and digital movies and books (direct competition with iTunes), and it’s even threatening to make its own Android Store and Tablet.

Steve Jobs might decide he wants to cut off the threat before it grows too big, and might release a dedicated reading device. It would probably be closer to Nook Color than to Kindle, but it would be a device dedicated to reading.

Of course, you could argue that an Apple iReader isn’t going to kill the Kindle. It might, however, slow it down.

Is the eReader market big enough for Microsoft?

If the threshold for Apple is tens of millions of units sold per year, for Microsoft its 50 million units sold per year.

It’s highly unlikely the eReader market will be big enough in 2011 to draw more than a few cursory glances from the biggest tech company in Seattle. It is worth noting that it has a lot of the elements in place already – its Research division has shown off ePaper, it  has a decent Cloud Computing offering, it has done some book digitization work, and it won’t have a problem with software.

This might be the company Amazon is most afraid of. You have to look at the ridiculous amounts invested into Xbox and Search – Would Amazon really want to take on a company that is willing to lose a billion or more dollars a year to win over a market? A company that is willing to keep losing billions of dollars year after year until it finally wins?

Qualcomm – Why does it have a 3-screen reading tablet patent?

Last year Qualcomm got a patent for a 3 screen device that contorts into various things – movie player, tablet, book reader. Combine that with the hottest ePaper technology, Mirasol color ePaper, and you have the makings of a very decent reading tablet.

The question is – Would Qualcomm prefer to sell Mirasol screens, or would it prefer to sell Mirasol screens and also its own eReader?

It is the largest fabless chip supplier in the world, has total assets of around $30 billion, and makes around $3 billion a year in profits (courtesy Wikipedia).

It’s also invested $2 billion into a Mirasol screen production facility, and claims to have won a major eReader client. If it decides to make an eReader of its own, it could definitely shake things up.

Samsung – Will Samsung bring its eReaders to the US?

Samsung is selling a pretty decent, albeit expensive, eReader in the UK and Europe. It also has another eReader in the works.

Will it bring one or both of these to the US?

Samsung had $117 billion in revenue in 2009, with $8.33 billion in profit. It isn’t exactly the type of company you want jumping into your market.

It’s already shown it isn’t scared of challenging a market leader by releasing the Samsung Galaxy Tab to take on the iPad. It’s sold over a million of those. Samsung’s also got the #1 spot in TVs, and the #2 spot in smartphones. It’s interesting how Samsung isn’t on anyone’s radar.

Hitachi – Is Hitachi’s ePaper ready for an eReader?

Hitachi is another company that is on no one’s radar. It makes TVs and camcorders and computer hard drives. What’s interesting is that it’s working on ePaper. Given its focus on electronics, it wouldn’t be a stretch to imagine that if it succeeds in its ePaper endeavors, it’ll move on to making eReaders.

Hitachi has $95 billion in assets, had revenue of around $96 billion in 2010, and profits of $1.145 billion (which is quite close to Amazon’s $902 million profit in 2009).

It’s shown solid intent by working on ePaper – While it’s unlikely it’ll be ready to release an eReader in 2011, it might eventually play a part in the eReader wars.

Toshiba Biblio Leaf Solar-powered eReader set to arrive in 2011

Toshiba was supposed to launch its solar-powered Biblio Lead eReader in Japan on Christmas. There’s a chance it makes it to the US in 2011 itself.

Toshiba had $19.7 billion in profits in 2010. That’s almost as much profit as total 2009 revenue for Google ($23.65 billion, $6.5 billion profit) and Amazon ($24.5 billion, $902 million profit).

If their eReaders are as good as their laptops, Toshiba will be a dangerous, dangerous competitor.

Fujitsu – Will the Fujitsu Color eReader make it to the US?

Fujitsu has released two generations of its FLEPia color eReader in Japan. Nothing in the US.

It’s quite likely that Fujitsu will make its way to the US. Its first generation color eReader was a large screen one for over $1,000 – However, you have to imagine it’s figured out how to cut costs, and it might be the first company to bring a reasonably priced color eReader to market.

Fujitsu is a pretty big company – $32 billion in assets, $46 billion in revenue, and $824 million in profits for 2009.

Sharp’s Galapagos Reading Tablet reaches US in 2011

Sharp has already released its Reading Tablet in Japan, and promises to bring it to the US soon. There’s a 5.5″ variant and a 10.8″ variant – both use LCD screens.

This list of Global Tech Companies with the Highest Revenue at Wikipedia is fascinating, and Sharp is at the 18th spot – right between Intel and Motorola. We’re talking about $34 billion in assets and $33.6 billion in revenue in 2010.

Sharp makes everything from TVs to smartphones – it’ll have a lot of experience to draw on as it fights in the eReader wars.

Asus should be releasing its eReaders in the US in 2011

Asus made a lot of noise at CES 2010, and then changed its plan of introducing two low-priced eReaders in early 2010. It finally started shipping the Asus DR900 eReader in December. Not sure when it gets to the US.

The Asus DR900 has a 9″ screen, and would end up being one of the few Kindle DX competitors. Asus also has a smaller eReader in its lineup.

Asus has been having a bit of a rough patch as the netbook market has stalled. However, it’s still a monster – $21.2 billion in revenue in 2009 and $520 million in profits. It’s also very good at cutting costs, and isn’t the type of company you want to be competing with very often.

Acer Lumiread set to arrive in 2011

Acer talked about its eReader plans in early 2010, then said it’s backing off, and now is saying it’ll be releasing the Acer Lumiread eReader soon. The Acer Lumiread has already reached the FCC – hopefully we’ll be seeing it in early 2011.

Acer itself is a solid company – $17.9 billion in revenue in 2009, with $384 million in profits. It’s also the second biggest notebook manufacturer in the world (unconfirmed).

Additionally, it stole the netbook market from Asus – So it has some experience of dethroning a market leader.

A lot more new eReader Possibilities than expected

Have to say it’s a little surprising to find out that so many tech giants, from all over the world, are looking to release their eReaders in the US in 2011.

We started with Google, Apple, and Microsoft – but they are all a bit unlikely to actually produce and release a dedicated eReader in 2011.

A lot of the remaining companies, however, are very solid bets. These are companies that already have eReaders in production, in most cases have an eReader out in another country, and are very likely to actually release eReaders in the US in 2011.

It’s a surprise that there are so many of them (at least 6 sure bets), and it’s a surprise that they have such rich pedigree.

eReaders are already a hot market – It doesn’t matter whether Amazon and B&N hide sales figures or not

If you look at the Wikipedia link above (Top Global Tech Companies by revenue), you realize something startling –

  1. Samsung, which is 1st on the list with $117 billion in 2009 revenue, is releasing an eReader in the US soon. Samsung’s E6 eReader is already out in Europe.
  2. Hitachi, which is 3rd on the list with $99 billion in 2009 revenue, has an ePaper product, and might have an eReader in the works. 
  3. Sony, which is 5th on the list with $79 billion in 2009 revenue, started the whole eReader fire. It’s continued to invest in eReaders.
  4. Toshiba, which is 6th on the list with $76 billion revenue in 2009, has its Toshiba Biblio eReader out in Japan. It’s promised to bring its eReader to the US soon.
  5. Fujitsu, which is 12th on the list with $46 billion in revenue in 2009, has had a color eReader out in Japan since 2008.
  6. Apple, which is 14th on the list with $42.9 billion in revenue (please note that its 2010 revenue is around $65 billion), already has the iPad out and is attacking the eReader market with it. There’s talk that the iPad 2 will focus on reading and will include a screen that minimizes glare.
  7. Sharp, which is 18th on the list with $33.6 billion in revenue in 2009, has a reading tablet out in Japan, and is bringing its reading tablet to the US in 2011. 
  8. Google, which is 23rd on the list with $22 billion in revenue in 2009 and $6.5 billion in profit, might be working on an eReader. It’s already jumped into ebooks.
  9. Asus, which is 24th on the list with $21 billion in revenue in 2009, has a large screen eReader arriving in Taiwan very soon. Asus delayed its US release after the iPad came out, but might bring its eReaders to the US in 2011.
  10. Acer, which is 25th on the list with $17.9 billion in revenue in 2009, has the Acer Lumiread eReader. It should be out in 2011.

7 out of the 25 highest revenue tech companies in the world already have eReaders. Only 1 of those is currently available in the US – the other 6 will almost certainly arrive in 2011.

Another 3 companies (Hitachi, Apple, Google) might jump in with an eReader or a reading tablet. Apple has been trying to pass off the iPad as an eReader all through 2010, and will probably paint the iPad 2 as an eReader all through 2011.

2010 was the Year of the eReader. 2011 might be the Year of the eReader Wars.

Not sure which competitor Amazon is fooling by not releasing sales numbers. You can bet it’s costing Samsung, Asus, and all the other companies on the list just a few thousand dollars to send recon workers into Foxconn, and get full details on how many Kindles and Nooks are being produced, shipped, and sold.

Are Kobo and Pocketbook the dark horses of 2011?

The Kindle and the Nook Color are both on a roll.

Kindle 3 and Kindle WiFi are clearly a step ahead of other dedicated eReaders – Unless B&N produces a stellar Nook 2 the majority of hard-core readers are going to end up as Kindle owners.

Nook Color has managed to create a unique niche for itself – the Reading Tablet. It’s going to win over a lot of casual readers. Unless iPad 2 is focused on reading, or a Kindle Reading Tablet materializes, Nook Color is going to dominate the ‘casual reader’ segment.

There are, however, two rather unlikely candidates that promise to give the Kindle and the Nook Color a run for their money – Kobo and Pocketbook.

Kobo as a threat to the Kindle Store, and to the Kindle

Kobo has a few things going for it –

  1. It fights on eReader price. It released the $150 Kobo eReader when other eReaders were around $200. Its Kobo Wireless eReader is currently on sale for $119 at Borders (thanks to a commenter at MobileRead for the tip).
  2. It fights on eBook price. Kobo’s ebook prices are close to prices in Kindle Store and Nook Store. Kobo Store always has offers and coupons.
  3. It has good backing. Borders is almost bankrupt, but it does provide exposure. The other backers are solid, solid companies.
  4. Kobo has extensive international reach. Its backers own a lot of retail stores around the world – which could all end up selling the Kobo Reader. Here’s a post on Kindle vs Kobo strategic advantages which details the ridiculous worldwide retail advantage Kobo has.
  5. It’s very, very persistent. Look at the rate at which it sends out coupons. Or the fact that it realized not having a wireless eReader was an issue, and released a new wireless version of its eReader.
  6. Its ebook store and its apps are well-designed.
  7. It sells in ePub, and it sells internationally. Combine that with the decent prices, and a lot of Nook and Sony Reader owners will choose it. Also, Kobo Reader supports ePub from any store using Adobe DRM.
  8. It’s leveraging existing brands – Borders in the US, Indigo in Canada, REDGroup in Australia, and so forth.

The primary reasons Kobo is a threat to Kindle are – It fights on price, it fights all over the world, it doesn’t give up, it’s been improving regularly, it has good backing, it sells ePub books.

Also, it isn’t afraid to compete. It isn’t ‘focusing on quality’ or ‘choosing international over US’. It’s going head to head with Kindle in reading apps, in eInk based eReaders, and in ebook stores.

Kobo is likelier to survive the eReader wars and thrive, than Sony.

PocketBook’s 2011 eReader as a Nook Color rival

Qualcomm has talked about how it has won a major client for its Mirasol color ePaper screens. Apparently, the client is so major that Qualcomm has invested $2 billion in production facilities. This plant is going to begin volume production in the beginning of 2012 – You have to wonder whether that’s when we’ll see a color Kindle 4.

Qualcomm also has a production joint venture with Foxlink which has been producing 5.7″ Mirasol displays in small numbers since April 2010.

This production source is probably what PocketBook will use for a color eReader it will show off at CES 2011, and which it promises to release in the third quarter of next year.

PocketBook’s Qualcomm Mirasol powered Color eReader might be just as big a threat to Nook Color as Kindle Tablet – unless Kindle Tablet uses Mirasol color ePaper.

A few things are worth pointing out –

  1. PocketBook’s color eReader would have much better battery life than Nook Color.
  2. The newness factor can’t be underestimated.
  3. We have no idea what the price would be – At $299, it’d be a big threat to Nook Color. At $400, it’d not be a threat at all.
  4. PocketBook has been making eReaders for quite a while. It’s one of the few smaller companies to not get decimated in 2010. In fact, it’s one of the few companies that has a large screen eReader.
  5. PocketBook has been trying hard – It has a variety of models, including a TFT color screen based 7″ eReader. It has a lot of good experience it can leverage when making its color eReader.
  6. It sells its eReaders in USA, Canada, Mexico, Australia, and Asia.
  7. It’s one of the few smaller eReader companies that makes good-looking eReaders (a few of its eReader models, not all).
  8. PocketBook is being aggressive about pricing – Its 5″ PocketBook 360 eReader is currently available for just $129.
  9. It supports ePub.
  10. It also supports a lot of formats which other eReaders don’t – such as FB2, CHM, and DJVU.

Perhaps the most impressive Pocket Book achievement is surviving 2010. If it can manage to release a Mirasol powered Color eReader by Q3, 2011, it’ll force Amazon and B&N to release color eReaders quicker than they otherwise would.

Kobo and PocketBook might play a bigger role than we realize

Kobo kicked off the race to $100 eReaders with the $150 Kobo Reader. It’s also doing a lot of price-cutting in eBooks. It’s going to continue to play a big role in eReaders in 2011. If it keeps improving at its current rate, it might replace Sony as a member of the Big 3 eReaders.

PocketBook might kick off the entire color eReader movement – If it manages to release a color eReader by Q3, 2011. If it brings Qualcomm’s Mirasol ePaper to market, it’ll force other eReader companies to scramble and release Color eReaders using Mirasol, eInk Triton, or another color ePaper technology. It would be remarkable if PocketBook turns out to be the company that drags eReaders into ‘The Promised Land of Color ePaper Screens’.

At a time when Kindle and Nook Color seem far ahead of the pack, it’s good to have a couple of dark horses competing in the eReader wars.