The Extent Of B&N’s Weakness In The Tablet Space

Pretty much everyone knows that Barnes & Noble had a bad holiday season in terms of selling tablets, even the company acknowledged it.

I was inclined to let it lie, I did wonder why B&N had under-performed, after all the  company seemed to have perfectly fine tablet devices on offer, but perhaps it was just one of those quirks that sometimes happens. But then I saw the IDC figures for tablet shipments in quarter four, 2012 and, even if we take those figures as close to accurate, the news  is really quite bad news for B&N:

Worldwide tablet shipments outpaced predictions reaching a record total of 52.5 million units worldwide in the fourth quarter of 2012 (4Q12), according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Tablet Tracker. The tablet market grew 75.3% year over year in 4Q12 (up from 29.9 million units in 4Q11) and increased 74.3% from the previous quarter’s total of 30.1 million units. Lower average selling prices (ASPs), a wide range of new product offerings, and increased holiday spending all acted as catalysts to push the already climbing tablet market to record levels.

via Tablet Shipments Soar to Record Levels During Strong Holiday Quarter, According to IDC – prUS23926713.

B&N went from shipping 1.4 million tablets in 2011, to shipping only 1 million in 2012 (an almost 28% drop in units shipped). That would be bad enough in a stable or falling market, but the market GREW by some 75% over the same period.

B&N was crushed by its closest competitor, ASUS who went from shipping 0.6 million units to shipping 3.1 million units! Or from less less than half of what B&N sold to shipping three times more.

Amazon moved decisively away from B&N, shipping six times as many units. Samsung, who only sold 600,000 more tablets than B&N in 2011, shipped 6.9 million more tablets than B&N in 2012.

Even Microsoft, whose tablets were new entries to the market (and who have partnered with B&N in the Nook/Newco venture) is said to have shipped 900,000 units.

The only sensible analysis of these figures is that B&N is losing ground and facing vibrant, effective and tough competitors. Unless the deal with Microsoft yields fruit soon and enables the Nook/Newco venture to grow shipments and sales aggressively, we have seen the peak of the Nook tablet business.

 

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Story title edited from Failure to Weakness. I felt using failure was unfairly harsh on the company, given the success they had in selling 1 million units, no mean feat for a bookseller!

Go Read This | The E-Reader Revolution: Over Just as It Has Begun? – WSJ.com

Think of it like the horseless carriage! I think that line about the real innovation is where it’s at:

“The real innovation in e-readers has been giving consumers a convenient way to buy books, wirelessly, without even having to use their computers,” says Sarah Rotman Epps, a Forrester Research analyst. “Giving consumers a digital storefront right in their hands, that’s what really made e-readers a phenomenon.”

But tastes and technology have moved on. People haven’t stopped reading. They are just increasingly likely to read e-books on tablets rather than e-readers, according to a recent Pew Research Center report. The polling firm found that 23% of Americans said they had read e-books in 2012, compared with 16% in 2011

via The E-Reader Revolution: Over Just as It Has Begun? – WSJ.com.

Go Read This | Pearson buys stake in Nook Media | The Bookseller

On the face of it this seems an odd move for a company so keen to unload its trade business into a joint venture with Random House in the driving seat. However, the college stores and the fact that students and their instructors are rapidly moving online are clearly the driving factor on this deal, reminding us just how much Pearson sees education as its future:

Will Ethridge, chief executive officer of Pearson North America, said: “With this investment we have entered into a commercial agreement with NOOK Media that will allow our two companies to work closely together in order to create a more seamless and effective experience for students. It is another example of our strategy of making our content and services broadly available to students and faculty through a wide range of distribution partners.”

Worth noting too is the increased value now being placed on B&N’s Nook business. Seems that their device play has worked even better than might have been expected, even this time last year.

via Pearson buys stake in Nook Media | The Bookseller.

The Rewards & Costs Of Inaction

Eason LeafI’ve often written of the value of inaction in the face of an uncertain future. Today, I want to write about both the rewards and the costs of inaction in a specific case, Ireland and the ebook retail business.

Eason, by far the largest bookstore chain in Ireland, is set to launch an ereader onto the Irish market in December. It’s called the Eason Leaf. To be fair to Eason, it has a natty offering, a 6-inch, touch-screen eInk device with weeks of battery life and storage for 4,000 titles. All for less than €100. It could plausibly become the best-selling dedicated ereading device in Ireland after the Kindle and create a mass market for ebooks sold via the Eason ebookstore.

You could say that the company’s move is a great example of collecting the rewards of inaction. Having followed a sensible and cautious strategy in a period marked by uncertainty and using the intelligence it gained during that period, Eason acted decisively.

It bought in a device from an OEM, branded it and is selling content directly to readers via its own ebookstore. In this way Eason can build a closed circle for its customers with itself at the centre and all the while build a digital retail position to rival its physical one.

No doubt Eason has seen the work Barnes & Noble was able to do in the US, converting heavy book readers to Nook users through in-store selling efforts and hopes to replicate it.

Even if you see the move as more defensive, ie a way to capture a limited audience of ereading book people, while ensuring the majority stay devoted to print, the strategy has the benefit of being low cost. I don’t often have praise for Eason, but in this instance I think the company has played a good hand. Given the choices available to Eason I think it has taken by far the best option it has.

The costs of inaction of which I wrote at the beginning then are being paid by the other ereading/ebook retail players (Kindle aside) whose inaction has meant their ereader presence here is not backed by a convincing consumer message, and certainly not by a retail store presence. They have not scaled rapidly enough in order to stifle competition,

Kobo seems to be making the most of its distribution via chains like PC World (distribution which includes even the keenly priced Vox table at only €139 which packs a fair punch relative to the Leaf) but name recognition is low and no BOOKSELLERS seem to be on board except WH Smiths whose High Street retail presence in Ireland consists of one concession in Arnotts. Without a convincing way to reach the readers how will Kobo convert them from print to digital?

Nook‘s plans are mystifying though the company does seem to be offering to ship tablets and ereaders to Ireland from its UK Nook site. If Kobo has a name recognition problem I wager Nook’s is far, far worse in Ireland. Nook then faces a huge challenge in establishing a name, a brand and a conversion strategy in Ireland.

Apple is the only competitor with some chance of making gains in 2012, with the iPad mini, but in truth I suspect that device will not be a book readers choice. I’ll wait to see.

The truth is though that all these companies could have acted more forcefully in Ireland at any time, it’s a small, English language territory with pretty friendly tax arrangements. It was inaction when the time called for action that led them to where they are now.

The costs of inaction for the major Amazon rivals are first and foremost that a local competitor in a small local market looks set to steal a march on them. It seems so very unlikely but it’s really happening (I wonder who will be the first to pondering buying out the Eason operation should it prove successful?).

In an English language market that could easily be technologically serviced from the UK or US (as Amazon does with Kindle) so long as the retailer made a small commitment on the ground marketing and brand building and converting print readers to digital, a small bookseller with great physical footprint and footfall but not much by way of a digital track record might just, strangely, be a leader in this shift from print to digital in Ireland.

We always do things a little differently here!

Eoin

Amazon Steals Everyone’s Thunder Again (But Quietly)

Fascinatingly clever (if predictable in many ways) move from Amazon to extend the reach of its Kindle Owners’ Lending Library (KOLL) to the UK, Germany and France. By doing so it demonstrates very clearly that it is Amazon who is really driving the pace of development in ebook adoption and ebook retail. What’s more, it is making clear that its rivals are struggling to match its services to authors and readers within their own ecosystems. As the focus of ebook growth moves rapidly beyond the USA (has moved already in truth), Amazon is making the case for giving it exclusivity even more compelling.

Amazon.com, Inc. today announced that the Kindle Owners’ Lending Library is coming to the UK, Germany and France later this month, bringing Kindle owners with a Prime membership over 200,000 books to borrow for free as frequently as a book a month, with no due dates. Independent authors and publishers using Kindle Direct Publishing KDP who enroll their books in KDP Select can be included in the Kindle Owners’ Lending Library in the UK, Germany and France, as well as the US. With the new lending libraries launching this month, the KDP Select fund has been increased by $100,000 to $700,000 in October, with a larger increase anticipated in November. Authors will earn money every time their book is borrowed from any of the lending libraries – in September, authors earned $2.29 per borrow, which is more than many KDP books earn per sale.

via Amazon Media Room: Press Releases.

What amazes me the most about this move is just how dangerous it is for the ebook retailing rivals who have yet to open their doors to self-published content. In reality only Kobo has a fully functional platform for self publishing authors beyond the USA (Apple does too, but only to the extent that those who have a nice Mac can access their iBookstore, but not everyone has a Mac).

Nook’s platform is US only, though the talk is that this will change soon, the longer B&N & Microsoft exclude non-US citizens from the service, the longer Amazon has to lock in exclusive content for three months at a time. It’s not that the content individually is necessarily compelling, but given the wide field of talent in question, some is sure to be winning material, even if much of it isn’t great. The trick is, of course, that Amazon is armed with the tools to sort, grade and sift through this mass of titles and to promote, suggest and even work with the best (or just the most saleable, let’s not forget that the goal is money-making not literature spreading).

I’ve talked before about how important authors are to the success of an epublishing platform and ecosystem. Sometimes I think the retailers agree with me on this, other times I think they only pay lip service to the idea. Perhaps that’s a lingering snobbery regarding self publishing authors (which is foolish, idiotic and wrong-headed in an age when some of the biggest writers are rapidly moving towards self publishing, are already self publishing or have emerged from the self publishing space). Perhaps it is a desire to avoid dealing with so many small accounts and the headaches of customer service and platform development that entails. Who knows, but the longer these ecosystems remain closed shops to direct author engagement the larger a lead they allow Amazon to build up on them.

Every author Amazon signs up for KOLL is three months of exclusive sales for Amazon, three months lost revenue for their rivals. More importantly it is three months of sales data and analysis for Amazon that no-one else will have. That’s especially important when a title is loaded into KDP & KOLL for the first time, before getting a look in elsewhere. What will happen when one of those sign ups turns out to be the next EL James? What will happen is that Amazon will sign that author up directly, before the KOLL period ends and the game, for that author, is up for the other platforms.

It is not just dangerous to rival retailers though. If Amazon succeeds in convincing enough authors that KDP & KOLL are the way forward and along with them, exclusivity, companies like Smashwords and other aggregators of self published content will be put in the position of having to justify their offering. As long as a vibrant market for content persists of course (and despite this move, we do have a vibrant market for content) everyone has room to move and grow.

So yes, this move is illuminating, it suggests that Amazon is still the pace setter and is capable of moving faster and more aggressively than anyone else (still, after five years). Kobo has started something of a price war for self published authors though, by offering a higher royalty to authors who use their self publishing platform. If this keeps self publishing writers committed to an non-exclusive policy then it will have been a wise move. I’m sure it is a smart response from a smart company, even if it is one that admits to a certain weakness in terms of the capability of their platform, but then competition doesn’t (and indeed shouldn’t) always mean matching your rivals move, but finding clever and novel ways to best them where your strengths lie.

What that in mind, Kobo and other Amazon rivals would do well to pay attention to Baldur Bjarnason‘s piece on FutureBook about how Ebook publishing platforms are a joke, pay attention that is and offer some of the services he mentions to self publishers asap.