Kindle, Nook Strategy Review – Can Nook catch Kindle?

With the Kindle 3 doing very well and B&N going with a Nook Color ‘reading tablet’ rather than an eInk based Nook 2 the obvious question is – Does Nook still have a chance against the Kindle?

Well, there are 5 avenues of attack – 5 weaknesses Nook could use to catch up with the Kindle and perhaps even beat it.

Kindle Weakness #1 – No Device for Casual Readers (only reading apps)

Amazon is currently leveraging Kindle for iPad, Kindle for iPhone, and other reading apps to reach casual readers – these channels perhaps account for 10% to 30% of total Kindle book sales.

With the Nook Color B&N is going after this exact segment – people who read but want a device that does more than just read. A device dedicated to non-dedicated readers is a big risk to Amazon which also faces a few other risks when it comes to casual readers – Apple can easily kill two of the most important channels, Amazon doesn’t have the advantage of being the default or the only reading app on these platforms, other companies can beat it, and it has little control over the complete user experience (resulting in oddities like users having to buy Kindle books through the browser).

We have the extremes – the hard-core readers and the ‘read once a year or less’ people. Nook Color fails for both.

However, there’s a broad stretch in the middle – People who don’t need an iPad or can’t afford one and people who don’t read enough to justify a Kindle. If we were to take this section of people (who read between 1 book a month and 1 book a year) – They are there for the taking. The Nook Color easily beats the Kindle for these people.   

Kindle Weakness #2 – Amazon’s position of power making it slow and unable to take risks

Kindle 3 is a very impressive eReader but Amazon has shown a remarkable tendency to be slow – It didn’t add PDF support until Nook arrived, it’s only now adding support for lending, and it’s taken 3 years to add Kindle book gifting.

As Amazon’s position grows stronger it also loses the ability to innovate – Why change a winning formula?

It continues to do well but it doesn’t know what parts of its ecosystem are liabilities – Is the lack of ePub support a danger? Is the store too overcrowded? Is the Kindle not catering to some sets of readers?

B&N can take a big risk like go with Nook Color but Amazon, mostly due to it success, can’t really experiment. Which means that when an Amazon competitor creates a very dangerous Kindle rival (we don’t yet know if Nook Color qualifies) Amazon’s only option will be to react to the threat after it’s gained a foothold.

Kindle Weakness #3 – Library Books and ePub Support 

Let’s set aside talk of openness and ePub – it’s something even most tech-savvy people don’t fully understand. The real danger ePub poses is that Library Books are usually offered in DRMed ePub format.

That means a relatively large number of people want an ePub supporting eReader so that they can get free library books. The actual benefit isn’t huge when you consider you have to wait for library books and that ebook choice at libraries varies wildly. However, people are trained to get books from Libraries and many depend on it.

This is probably the single most frequent reason people give for picking Nook over Kindle. No one ever says – ePub. They just say they want to be able to read library books on their Kindle or Nook.

Kindle Weakness #4 – Google and desperate Kindle rivals combining forces

The Kindle Store is a huge advantage for Amazon – both in book price and book range.

Nook is unlikely to migrate to a Google Books store but Sony Reader is very likely to. Most of the smaller eReader makers are also likely to migrate to using Google Books. At that point we might have a dozen eReaders with better book prices and availability than the Kindle.

On top of that you have Google’s ability to set their Google Books store and their partner companies’ apps as the defaults in Android and elsewhere.

This is probably the biggest threat to Amazon and a very immediate one.

Kindle Weakness #5 – Slowly growing Kindle App Store

The iPhone’s App Store stands as an insurmountable obstacle to rival smart phone makers. Microsoft recognizes this to the extent that it’s guaranteeing money to developers to develop apps for its new mobile platform. Android is becoming a credible threat largely due to a rapidly growing app store which uses openness and a no-review policy to appeal to developers frustrated by Apple’s restrictions and control.

Facebook used apps to beat out MySpace and become enormous. It went to the extent of offering app developers 100% of revenue – something it’s changing now. There are dozens of companies that have grown out of its app store with the biggest becoming more profitable than Facebook itself. Creating a monster like Zynga is a risk – But taking that risk allowed Facebook to become what it currently is.

With eReaders the first app store that gains traction is going to destroy every other eReader. There are no two ways about it. No company in the world can compete with thousands and thousands of hungry developers (hungry for success and freedom and a chance to prove themselves).

Quite simply – The eReader company that attracts more developers will win the eReader wars.

The current situation is intriguing and puzzling at the same time.

Amazon’s Perfect, Perfectly Curated Kindle App Store

  1. Amazon is trying to be perfect. The Kindle App Store is like the prize-winning garden where not a single strand of grass is out-of-place. 
  2. Amazon is also being selective – there is a Beta with limited participants. Only two companies have released apps so far.
  3. Amazon is being deliberate – only 6 paid apps out so far and all are games. If we assume the Nook App Store will debut in March 2011 Amazon will probably have 40 to 60 apps available then – perhaps less.
  4. Kindle Apps embrace all Kindles except Kindle 1. They aren’t available internationally yet but, contrary to what international Kindle owners like to think, it’s not some grand conspiracy theory – Amazon is probably just testing the waters and will expand internationally in 2011 or 2012.
  5. It’s also Amazon’s own app development platform – completely separate from any other app platform.

Amazon is, in effect, striving for perfection – an app store where every app is 4.5 stars and perfect. An App Store that is carefully cultivated and blended into the Kindle ecosystem.

Well, the easiest way to destroy or beat perfection is through chaos. 

B&N’s Nook Color App Store – Cultivating Chaos

  1. B&N is building on top of Android though it has its own App Store and its own review process.
  2. B&N has no Beta and no Limited  appended to its App Store. Everyone who’s applying is being let in.
  3. Porting Android Apps should be easy which means a lot more apps than Kindle App Store which requires a lot more work to port over apps.
  4. Nook Apps work only on Nook Color. That means no restrictions due to eInk and there’s just one device to support. That’ll mean apps come out quicker.  
  5. B&N decides what goes in – However, from the long list of launch partners and the relaxed entrance policies it seems likely that B&N will go for quantity over quality and let Nook Color owners decide the winners.

The Nook App Store might debut with 10 apps or it might debut with a few hundred. It would, however, be a safe bet that due to its liberal policies and Android foundation it might soon have more apps than the Kindle App Store.

B&N, intentionally or unintentionally, is letting thousands and thousands of developers take a shot at providing value to Nook Color owners in return for the promise of a small to huge financial reward. That’s the best way to add value to a platform – let the developers in.

This presents a huge problem for Amazon – If it doesn’t attract developers and add apps at a similar rate it’ll turn its eReader Apps lead into a liability.

With App Stores the rich get richer

The more users on a platform the more developers want to make apps for it. The more apps for a platform the higher the chance a potential user will find a reason to choose the platform.

Let’s say Amazon and B&N continue with their current policies and in mid 2011 B&N has 500 apps out of which 50 are exceptional and Kindle App Store has 100 apps out of which 80 are exceptional. 

Does Amazon get an A grade and does B&N fail?

Actually, no.

An average user is more likely to find apps that cater to her/him when there are 500 choices than if there are 100 choices. In theory the Kindle App Store is more impressive. In reality, those 500 apps give Nook Color a big advantage –

Users care more about a platform having the apps they want than the average quality of apps on the platform.

Let’s say someone loves knitting and wants a knitting app. She’d probably pick a 3.5 star rated Knitting App on Nook over a 5 star rated Backgammon game on Kindle.

With 6 well rated games out for the Kindle so far the question worth asking is – Would Kindle owners be happier if they had gotten a simple Email Client?

Amazon has had a huge head-start in releasing apps – It’d be a huge mistake if it were to throw away that advantage because it’s chasing a mythical perfect app store full of 4.5 star rated perfect apps.

If B&N goes for sheer range it’s going to end up with apps that appeal to a broad spectrum of users and that will lead to a lot of sales. If Nook App Store ends up with 1,000 decent, 3.5 star rated apps by mid 2011 and the Kindle App Store has 100 perfect, 4.5 star rated apps with perfectly manicured nails it’ll be game over. Amazon will never be able to make up the difference and Apps will be an area it’ll just have to concede.

Nook prices drop to $149 and $199, Nook WiFi Specifications

Just a quick update to the news that Nook WiFi will be launching for $149 on Wednesday. In fact, you can already order it at Best Buy (the link below) or at B&N. It’s not yet available in stores and will be available in select B&N and Best Buy stores starting Wednesday.

Engadget commenters redeem themselves

Just as my hope in humanity was at an all time low someone posted links to the Nook at Best Buy. It’s true.

  1. The current Nook is $199 and available to buy.
  2. The new Nook is $149 and available to preorder. Best Buy shows it as arriving on July 1st, 2010 if you pick expedited shipping.

The Nook WiFi is here and this time B&N executives don’t make fools of themselves by announcing the product 5-6 weeks early.

Nook WiFi Specifications

  1. $149.
  2. 6″ eInk display.  
  3. WiFi support.
  4. 2 GB storage space.
  5. MicroSD Memory Card.
  6. Lithium Polymer battery.
  7. 7.7″ by 4.9″ by 0.5″.
  8. Weighs 12.1 oz.
  9. MP3 support and USB support.
  10. Changeable Font sizes.

Here’s the write-up from Best Buy –

  • 6″ eInk® Vizplex™ Electronic Paper Display
    Reads like a printed page and is clearly visible even in bright sunlight. Swipe the 3.5″ color touch screen below to browse your library. Adjustable font size for customized reading.
  • 2GB internal memory
    Provides space for storing up to 1500 eBooks or up to 26 hours of audio.
  • Built-in microSD memory card slot
    For accessing eBooks and other digital content stored on microSD memory cards (not included).
  • Supports a variety of media formats
    Including PDF, ePub, JPEG, PNG, GIF, BMP, PDB and MP3 formats.
  • 3.5mm stereo headphone jack
    For private listening.
  • Micro USB 2.0 port
    For fast data transfer.
  • Wi-Fi wireless LAN
    Connect to the Internet without wires.
  • Up to 10 days of reading
    On a single battery charge. Up to 3.5 hours charging time
  • B&N seem to have produced a $149 Nook that’s only missing the 3G. They’re going to make out like bandits.

    Previous Version of Post:

    A commenter, Joesph, at Engadget has pointed out that if you do searches like ‘new Nook’ on Google you can see an advertisement from B&N that states –

    Nook – starting at $149.

    Introducing 2 New Low Nook Prices. Now $149 – $199. Free Shipping.

    So it seems that not only are B&N launching a $149 Nook WiFi they are also dropping the price of the Nook from $259 to $199. Either that or they have 2 new models arriving at the $149 and $199 price points.

    Whatever it is, it’s pretty impressive and you have to wonder how Amazon will respond.

    Quick thought on comments on Engadget

    Let’s just say it now makes perfect sense to me why even Engadget themselves have their comments Off by default. That’s got to be some sort of record – even the site itself hides its commenters. Wow!

    Low and Lower

    It’s heartwarming to read the huge number of people who feel –

    1. That they will now buy an eReader.

      If the Wi-Fi only nook costs that much I might actually pick one up. I don’t really need a giant iPod Touch er… I mean iPad…. considering that I already own an iPhone.

    2. That they are just waiting for eReader prices to reach $100. Here are a few sample comments –

      Comment 1:
      Stiillll a little wary of buying one, but it’s definitely the top choice for dedicated readers at that price.

      Comment 2:
      So a 3G radio costs $110? Damn.

      $150 is a good price but I’d rather see it at around $100. Is it the eink keeping the price up? I was in B&N this weekend and got hands on and it just didn’t seem like there was enough beefy-ness to the thing to be keeping the price that high

    Apparently we are going to sell a couple million Nooks if the $149 version isn’t a mutilated version of the $259 Nook. Update: It isn’t and yes, B&N might shift a few million of these this year – So much for the death of eReaders.

    Father's Day Kindle Nook stand-off? $50 gift card with Nook

    Deciding between the Kindle and the Nook just became a little tougher.

    From today through the 3rd of July B&N have a $50 gift card if you buy a Nook at a B&N store or at their website. Given that both Amazon and B&N are already offering free shipping (free 2 day for Kindle) this is a really good deal.

    Purchase a NOOK at participating Barnes & Noble retail stores or online at (EAN: 9781400599998), and receive a $50.00 Barnes & Noble Gift Card, while supplies last. This offer is only valid for purchases made at Barnes & Noble retail book stores where NOOK is sold and for orders placed on

    Strangely, the offer is not available at B&N College bookstores.

    It’s a great promotion and you have to wonder why B&N have it – Is it to balance the Kindle’s arrival at Target? Is it to clear out stock and prepare for the Nook 2? Is it to make the most of Father’s Day and Graduation season?

    Why is B&N adding a $50 gift card to Nook purchases? 

    Is this part of a Father’s Day Kindle Nook stand-off?

    The first possibility is that B&N have identified the month of June as a critical one –

    1. Father’s Day is 20th June. 
    2. Lots of graduating students and graduation gifts.
    3. Lots of people are getting ready for summer reading.  
    4. Lots of school and college students are embarking on their long summer vacations.  
    5. iPad hysteria is beginning to subside and people now want a device they can actually use in sunshine and hot weather.

    CNet originally pointed out the Dad and Grad season as a possible reason for the Nook $50 discount –

    Needless to say, Barnes & Noble is trying to gain an advantage as we head into the important Father’s Day and school graduation buying season.

    “The company will provide a free $50 Barnes & Noble gift card with any Nook eBook Reader purchase through Barnes & Noble and Best Buy,”

    It’s as good a possibility as any. Amazon will have to respond – a $50 gift certificate is a big deal.

    Perhaps a Nook 2 is on the way

    The FCC just granted approval to a Nook Lite. It’s code name is Bravo Lite which makes you wonder if  the Non-Lite Bravo is the Nook 2 and when it’s going to show up.

    If there is indeed a Nook 2 on the way it’s not unimaginable that it arrives around the time Nook Lite arrives and the FCC approval would mean that’s soon. Thus, the $50 gift card would be a thank you for helping B&N clear stock of the Nook and prepare for Nook 2.

    Is it to counter the Kindle’s arrival in Target Stores?

    Kindle will be sold in all Target Stores starting June 6th.

    We suddenly have a big Nook advantage (retail availability, being able to touch and play with the device) nullified completely. There are also far more Target Stores than B&N stores.

    It would be the first time people get to actually see a Kindle and play with it and experience all its strengths – Kindle was the #1 eReader even when people had to buy it based on photos and their faith in Amazon. Now that they can see it for themselves there’s a possibility sales tilt even more in favor of the Kindle.

    B&N want to avoid that and they think $50 worth of free books with a Nook will help. They’re probably right.

    Are rumors of Kindle 3 weighing on Nook sales?

    There are so many rumors of Kindle 3 you’d think Apple were making it. Coffeeshops in Seattle, Bloomberg and loose-lipped executives are all atwitter about the Kindle 3 and people are probably beginning to delay their eReader purchases.

    Kindle and Nook sales are likely to be affected and one way to compensate is to lower the price. A $50 gift card is almost as good as a price-cut – People equate the gift card with money saved on ebook purchases. Suddenly, the Nook is just $209 which is definitely a bargain.

    Does B&N feel Kindle is pulling ahead and they have to compensate?

    Perhaps the most boring, straightforward reason for the $50 gift card.

    It might just be that B&N feel the Kindle is evolving too fast to keep up with – a new Kindle 2.5 release (well, hopefully soon) that has a lot of good features, Kindle for Android, a deal with Asus to get Kindle for PC, and lots of other moves.

    B&N took 7+ weeks to get out their iPad app, they are still fixing Nook bugs and still working on speed issues. At some level they must feel they can’t win the software side. Perhaps the $50 gift card is an indicator that B&N have decided to find other ways to attack Amazon.

    Are Publishers secretly helping B&N?

    You have to wonder –

    1. B&N have an ongoing promotion with a free book every week for 5 weeks. These are books that are not being made available free at other ebook stores.
    2. Now B&N are offering $50 worth of free books with a Nook.

    Perhaps the latter is connected to the former and perhaps Nook aren’t paying Publishers anything for the books customers will buy with their $50 gift cards. $50 in ebooks costs B&N just $35 as it is (Agency Model gives Publishers 70%). Perhaps Publishers are taking just $15, perhaps they are taking nothing.

    It’s a small price to pay to reduce the threat of the Kindle turning them into relics.