While the Kindle and the Nook Color continue to do well, there are lots of problems in eReader Land -
- Smaller eReader makers are dying out.
- Both Amazon and B&N are getting hammered by Wall Street for their investment in eReaders. B&N more so than Amazon.
- Apple seems ready to cut off the oxygen supply to eReader apps on the iPlatform.
Let’s take a quick look at each of these.
Kno and Alex are dying
Kno eReader is being phased out and the company is going to focus on making software. It’s a bit ridiculous – that a company making a dual screen tablet is considering selling off its hardware business and moving to making software for other people’s tablets. What a capitulation.
All Things D has a report on No-Kno -
Sources said Kno execs have recently decided that the quicker-than-expected uptake in tablet production by a multitude of powerful device makers had made its efforts to package a seamless offering less critical.
Instead, the company will focus on its robust software and services to offer students on the Apple iPad, …
BoomTown could not determine which two companies Kno was in serious discussions with about unloading its hardware business …
Made its efforts to package a seamless offering less critical?
They ought to be honest – They got destroyed in the Tablet market.
Almost in parallel, the Alex eReader is being phased out. It’s not clear whether the ‘phase-out’ is to introduce a new model or whether Alex is about to join Kno in the Beautiful eReader Graveyard.
B&N stock gets punished for B&N’s focus on the future, i.e. eReaders
Amazon’s stock got hammered after its last earnings release – Wall Street didn’t like Amazon’s focus on the future, i.e. eReaders. The same happened with Barnes and Noble today. Thanks to Roger Knights for the link to Bloomberg’s article on B&N and eReaders.
It’s some sort of joke where Wall Street isn’t willing to look beyond the next 6 months.
Barnes & Noble Inc., the largest U.S. bookstore chain, declined as much as 15 percent after suspending its dividend to conserve cash and invest in electronic books
What alternative does B&N have – Should it forget about ebooks and eReaders and go bankrupt like Borders?
You should be handing B&N a prize. What other company can compete with a giant like Amazon, survive a huge transition in its business, and come up with decent products that speed the democratization of Publishing.
B&N has the best Android tablet released so far. It has it for $249. It has around 20% of the market in both eReaders and eBooks – a larger share than it had in physical books. It should be getting an award for Most Adaptable Company of 2010.
Instead the stock is down 15% as Wall Street worries about its annual bonuses.
The problem is that for both Amazon and B&N this negativity from Wall Street has consequences. Amazon and B&N have to plan out 10 to 40 years into the future but they are hobbled by the geckos of Wall Street and the geckos’ focus on the next 6 months.
The threat of Platforms reneging on their (implicit) promises
So B&N and Amazon made a smart calculation -
- If we make eReader apps we reach all these casual readers.
It seems to have worked because, supposedly, 40% of ebook sales on iPad are via Kindle for iPad, and another 20% are via Nook for iPad.
However, B&N and Amazon either disregarded or didn’t realize two other things -
- A not insignificant portion of people who wanted a reading device got an iPad because they could get a choice of stores and/or they could get their favored provider (Amazon or B&N) on the iPad. Those were lost Kindle sales and lost Nook sales. It might be just 5% or 10% of iPad sales – but it was sales that Amazon and B&N lost thanks to their own iPad apps.
- Apple controls the platform. It can kick out Amazon and B&N any time. It can impose a tax and take all the profits for itself anytime. Now, its trending in that direction.
Basically, Amazon and B&N ought to realize now, if they haven’t already, that they are strengthening the enemy. For two companies that are forward-thinking for the most part, this was an amazingly short-sighted move.
Every platform is the same – a risky gamble. Perhaps not the Web and not the PC. However, Android, Mac, iPhone, iPad, and other platforms are just a gamble.
Not only is the grand ‘reading apps for every platform’ strategy a long-term impossibility, it’s strengthening the enemy.