Let’s start with a deal – Promise Not to Tell by Jennifer Mcmahon. Price: $1.99. Genre: Mystery-Thriller, Ghost Story, Past & Present. Rated 4 stars on 115 reviews.
Like the title of the book this post is full of ‘Promise Not to Tell’ things. A few that companies don’t want shared, a few that companies don’t realize.
Kindle just became a little bit less attractive to casual readers
Nook Color is a reading tablet that lets you check your email, browse the Internet on a color screen, play Angry Birds, and try out lots of apps. It even lets you hack it and run Kindle for Android. Casual readers will find it very, very compelling. It definitely beats the Kindle 3 for a portion of casual readers. As more and more apps get added that portion gets larger and larger.
Kindle just became a little bit more attractive to serious readers
B&N has pushed Nook Color firmly into the low-priced Tablet category. Serious readers are going to tend to pick the Kindle even more often than they used to. B&N has also handicapped the Nook 1 by making apps only available for Nook Color. It gives users the impression that B&N is discarding Nook 1 in favor of Nook Color.
Kindle 3 vs eInk Nook is going to turn into a massacre if B&N doesn’t release a Nook 2 soon.
Amazon is suddenly under even more pressure to release a Kindle Tablet
B&N’s Nook Color was a huge threat. However, most of the threat was its future potential to be a compelling low-price Tablet. A threat which, from Amazon’s perspective, was in the far distant future. Now, the Future is suddenly here. You have Pulse and Angry Birds on a Reading Tablet. You have lots of apps for children and Napster and Email.
The hard-core Apple people are never going to leave Apple. However, lots of other people want tablets and most of them don’t want to pay the Apple premium. If B&N’s Nook Color eats up the non-iPad tablet market there will be very little left for Amazon.
Nook Color is also likely to eat up a portion of the casual reader market. Readers who want a device they can read on and also check email on and surf on might be unwilling to pay $499 for an iPad 2 – but they might find the $249 Nook Color irresistible. Amazon needs a tablet to fight back – the Kindle is great for hard-core readers and for those casual readers who don’t want apps. For everyone else, Amazon has to have a Kindle Tablet.
The need for a Kindle Tablet to take on Nook Color becomes even more apparent when we consider the fact that Amazon wants to sell music and movies and games and TV shows. If B&N becomes the #1 Tablet for non-Apple people, Amazon gets locked out – perhaps permanently.
Apple couldn’t have dreamt that B&N would make Android a threat in tablets too
The rise of Android powered smartphones scared Apple into going with Verizon. Apple must have thought it was safe in Tablets – Unfortunately, B&N not only produced a compelling Android tablet, it produced one for $249. As a bonus, it inadvertently made the Nook Color easy to hack.
By releasing a decent app store (it’s decent given its B&N’s first attempt) B&N has transformed the Nook Color from Reading Tablet to Tablet even for people not willing to hack it.
This might be the single most important outcome of the Nook Color App Store – a competitor to the iPad that eats up the low-price Tablet market and the non-iPad Tablet market and becomes a huge force.
Every Android Device maker wants to/ought to/needs to build its own App Store
A few reasons why -
- The unrestricted nature of the Android Market means malware and low quality apps hurt the user experience.
- Android Market is a shambles. The focus on free and advertising (which is usually from Google – hence the focus on free) means developers who craft quality apps face huge difficulties when trying to make solid profit.
- Google promises lots of things with Android but you don’t get all the goods unless you follow Google’s rules. Android is free price-wise but device makers are discovering that there are lots of hidden costs.
- You’re exposed to the danger of things like Google tracking user information secretly.
- Android is just a moat for Google’s search (and a means to extend other moats like Google Maps and Navigation). More and more companies are realizing this and understanding the danger of relying on Google for an App Store.
- Why let Google take 30% from apps when you could get it for yourself?
- Why let Google have the power and control and relationship with developers when you could have it for yourself?
Basically, lots and lots of companies are re-growing the brain cells they killed in the haze of ‘Free Lunch & Free Drinks’ created by their friendly neighbourhood search engine.
Apple and Amazon are beginning to realize that B&N, of all companies, is a huge threat
Both Apple and Amazon worry about Google. Yet Google shows little interest in doing anything other than burning up markets it enters. It eats up customers of bad intent and ignores customers of good intent. It basically leaves all good-intent customers, who are willing to pay for quality products and services, to other companies.
Google is so focused on protecting search and beefing up its databases of user information (user location, user dreams/desires, user intent) that it simply doesn’t care that there might be profit in a market.
B&N is different – it’s going after paying customers, it’s going after customers of good intent.
This is hugely significant because both Apple and Amazon suffer. What happens is -
- Customers of bad intent take up a free offering from a company like Google or Facebook (a company that sells users and user information to advertisers and therefore doesn’t need to charge customers for the product – customers are the product).
- Customers of good intent that are not wedded to Apple or Amazon pick B&N.
- Customers of good intent who are wedded to either Apple or Amazon pick Apple or Amazon – despite the cost (Apple premium, delay in Kindle Tablet).
That second category is huge. It’s far more important than the 1st because no one is ever going to make hugely significant amounts of money from the first. You can check the balance sheet for YouTube and Facebook to confirm that – there isn’t as much money in customers of bad intent as there is in customers of good intent. Companies that cater to customers of bad intent are never going to make as much profit as companies that cater to customers with good, positive intent.
As far as Apple and Amazon are concerned, Google is doing them a favor – it’s separating the profitable customers from the unprofitable ones.
However, B&N is eating into profitable customers. Every customer of good intent who buys a Nook Color Reading Tablet is lost to Apple and Amazon.
B&N is in a position of huge power
Now it becomes clear why B&N wanted to buy itself or sell itself or do whatever it was trying to do. It saw itself as undervalued and was trying to buy up all of its stock at a bargain.
B&N has the best Android Tablet in a world hungry for a non-iPad Tablet.
Amazon is becoming careless
There’s no other way to explain what’s going on. It’s 6 months since the Nook Color was launched. It’s 4 months since B&N’s plans for the Nook Color (including email and an App Store) became apparent.
How can you not react for this long?
Apple has created a new market (Tablets) and left a large part of it for other companies. All the Android-powered Tablets (except Nook Color) have failed to take advantage. The non-iPad Tablet market is there for the taking.
Why is Amazon letting B&N get the first shot? Why is it letting B&N be the only company taking a shot?
Kindle Tablet has gone from important to critical
A huge part of Amazon’s digital ambition now hinges on the Kindle Tablet.
Amazon needs a channel to customers to sell its digital offerings -
- TV shows.
- Games and Casual games.
Amazon.com is one channel, but it’s dependent on other websites and on search engines and on the Internet. It’s also not with customers 24/7.
The Kindle is one channel – but it only covers books (and potentially physical goods). Additionally, the Kindle does not cover all casual readers.
A Kindle Tablet becomes critical – a pure, direct channel to customers that no other company can tax or interfere with. A channel without middle-men.
A Kindle Tablet becomes even more critical when you consider the fact that mobile devices like the iPhone are locking up customers. These devices are not just charging a tax (the way Google does) – they are literally locking out Amazon.
Amazon understands the power of controlling a direct channel to customers. It’s seen it with Amazon.com, and it’s seen it with the Kindle. It knows the Kindle Tablet is important. What it perhaps doesn’t realize, is that the Kindle Tablet is critical. No amount of incremental improvement is going to save Amazon if it gives up a huge first mover advantage to both the iPad and the Nook Color.
Filed under: Kindle Tablet | Tagged: crazy thoughts, kindle tablet | 25 Comments »