Nook: The Bride Stuck on the Shelf?

It must be the season when dreamers and some journalists cast their thoughts to opening their presents, sitting around open fires, drinking egg nog, watching sentimental films and potentially losing sight of reality.

Last week the long overdue divorce between Barnes & Noble and Microsoft was made absolute and the ill matched pair were finally put out of their misery. As we looked back over the couple’s short history, it is clear that the marriage was somewhat ill-conceived, and one more of convenience and hope than business logic. On one hand it was reliant on Barnes & Noble stretching itself past the Eastern seaboard and venturing where it had failed to tread before. Although they finally did this, it was too little, too late and done without real conviction and probably more down to the terms of the Microsoft deal than a burning desire to open up business outside the US. On the other hand Microsoft were pitched to be some sort of white knight to take on Amazon and deliver not just the much needed cash but the technology element of the proposition. Unfortunately the technology was not built on their Windows platform but on Android. There wasn’t cracks in the plan but chasms.

So Nook have apparently found yet another suitor in Samsung. Is this third time lucky or just another blind date and on the rebound? They appear to be still quietly beavering away to offload its Nook platform and this time to the media wanttobe. Samsung may have smarter technology and be in a good position to help Barnes & Noble, but does Barnes & Noble offer Samsung anything they can’t or shouldn’t be able do by themselves? Many will point to Barnes & Noble’s huge understanding and knowledge of the trade, others will say that they once claimed to be able to take on Amazon, but that they lost this battle even in their own back yard. Some will say that Barnes & Noble physical business is on the mend and Nook is a brand and service which has much to offer. Nook may be more stable now than those recent times when executives appeared to be leaping off buildings faster than the best trained lemmings.

Nook continues to haemorrhage and in its second quarter, ending November 1^st,  it's revenue fell 41% to $63.9 million, while digital content sales fell 21% to $45.2 million. This contrasted with Barnes & Noble’s retail sales, which fell marginally by 3.6% in the same quarter, which was partly down to store closures, but offset by the 1.9% rise in their college unit.

When we visited the flagship Union Square bookstore a few months ago, we were somewhat taken aback by the real estate given over not to more books but to non book product. It would be very interesting to discover the product revenues and profit by category and one would suspect that books are doing worse than it may appear.

We then read the Street’s article, ‘Wal-Mart Should Buy Barnes & Noble's Struggling NookDivision.’ No we didn’t miss the question mark off the end, they obviously thought that this was a serious proposition. The logic was that WalMart was building up its digital offer so Nook would offer them a quick and cheap leg up. They even believed that Nook had built up a serious and ‘robust’self-publishing digital business.

We also found ourselves in somewhat weird discussions with others who also proposed Barnes & Noble should go further and even consider subletting space within Walmart stores.

The reality often hits home after the Christmas. The merry festive season is replaced with the cold and often dark reality of January. Even the sales can’t often lift that morning after the party feeling. Perhaps it’s time the accountants allowed the Nook to be put out of its misery. Nook has been to the alter more times than many and unfortunately time, even this short time, has not made it any more attractive and the dowry has dropped significantly.

 Related Articles:

So What Does Nook Want to be when it grows up?           Feb 2013

Microsoft Return to e\books via Nook  April 2012

Living in a US Cenric World july 2012

Barnes and Noble, Nook and NEWCO Come to UK    August 2012

Nook , Nook, Please Let Me In    September 2012

Pearson: Is Nook Investment Wise Dot Com?  Dec 1012

Microsoft Capture Nokia On Transfer Deadline Day

Yesterday was the day of the big spenders. Gareth Bale became the world’s most expensive footballer and joined Real Madrid for £85 million,  Vodaphone announced the selling off of its huge stake in Verizon for a mere £84bn and Microsoft has agreed a deal to buy Nokia's mobile-phone business for 5.4bn euro ($7.2bn; £4.6bn).

Tottenham have already spent the cash and replaced Bale with half a team of international talent. Vodaphone are planning on giving their shareholders a huge dividend of some £54bn to sweeten the windfall and true to their nature will avoid paying any tax on the deal. But what of Microsoft and is the deal going to reverse their fortunes under its new leadership?

Only some ten years ago Nokia ruled the mobile world and was the device of choice for the majority. However, Nokia made some fatal errors of judgement around its operating system and also failed miserably to compete with its new competitors from the Far East and Apple. Today it finds itself with saes falling at the rate of 24% in the last year. Microsoft, like a giant tanker spent 10 years trying to change course in changing seas and took too long in doing so.

So will a marriage of two of yesterday’s men make any difference to their fortune moving forward?

Microsoft will now license Nokia’s patents and mapping services and take on some 32,000 Nokia employees but will it win the consumers over? Microsoft will also licence the Nokia brand for the next ten years which may sound a good move but may also not appeal to the consumer.

Mobile is the area of tremendous potential but it has been one of weakness for Microsoft. There attempts to fix their OS offer have had the hype but delivered little. Microsoft’s Surface tablet should have been a winner but turned out a loser and its weakness was down once again to the OS and its offer.

Nokia greatest weakness has been their inability to adapt and sort out its OS. So will Windows OS mobile be the new must have or will it merely burn a deeper hole in Microsoft’s purse?

The new Lumia phones, which run a Microsoft operating system, may offer a small rest bite and the potential for greater integration, but will the marriage also drive other mobile manufacturers away from Windows offers and yet closer to Android?

Real Madrid have already covered their expenditure with the sales of Kaka and Ozil and in shirt sales. Vodaphone believe they can survive as a smaller global player and have a wedge of cash to soften the move and we now have three clear mobile offers; Apple, Android and Windows/Lumia/Nokia/whatever brand they finally choose? 

Dumbing Down of Textbook Publishing?

The textbook market has always offered high reward and with it high risk. Many have tried to corner the market including the big technology giants, chains, publishing joint ventures and new start-ups, but it remains, like its students and their courses - diverse.

Now Google has joined Amazon, Apple, Microsoft in its intent to go after what they all regard as ’low hanging fruit’, but what often turns out to be not Golden Delicious apples but high hanging and sour crab apples.

Of course Google believe that its new Nexus 7 Tablet is 'perfect for students', and therefore intends to stuff a special educational section of its Google Play store with textbooks. Its "comprehensive" selection of titles will be available for purchase and for rental over six-months periods and cover works from the five major textbook publishing houses. Just to add some spice Google is promising that they'll be at discounts of up to 80%. Google’s partners are Pearson, Wiley, Macmillian Higher Education, McGraw-Hill and Cengage Learning.

Given that textbooks are expensive an 80% discount would look attractive. The high cost is regarded as the reason why used textbooks and textbook rentals have been booming of recent years and this together with the entry of all the major technology giants has been heavily impacting the major textbook publishers. On one hand the used and alternative marketplace is stealing sales and on the other they are often have high discount terms being dictate to them.

One way the likes of Pearson and McGraw-Hill Education are trying to address this is to create a new model aimed at developing online versions of their texts that often have interactive features, and then selling the students access codes which expire at the end of the semester. However, persuading students to go digital isn't straightforward and according to research firm Outsell, only 27% of the textbook spend in US secondary schools and colleges was digital.

Pearson is undeterred and are restructuring to emphasize online content. Cengage Learning, has stated its intent to emerge from its recent bankruptcy filing more focused on digital. McGraw-Hill Education, has acquired an equity stake in one software company focused on digital learning and acquired another.

Just to confuse the issue further, the major publishers have created a joint venture called Coursesmart which was set up to offer a joint direct market service to promote and sell digital textbooks. However when one’s parents are spreading their bets it’s not surprising that it has become somewhat of an ‘also ran’.  

Some would say that the publishers are pursuing a multi-channel strategy others would suggest that it is less of a strategy and more of, ‘every which way but win’ and that to compete against yourself and your investment is at best questionable and not wise dot com.

But is digital a forgone conclusion?

In a survey last year by the National Association of College Stores, some 77% of college students said they preferred print to e-books. Another survey, by the research firm Student Monitor, found only 14% of students had classes that required online texts and only 2% bought the majority of their books in digital format.

So is it down to cost and availability through alternative markets or does physical textbook still serve the students’ needs better? One thing that is certain is that both the publishers and technology companies are betting on digital and are trying every which way to win the market. The alternative is seen by them as more used and second-hand Textbooks and stolen sales. Some may argue it’s a choice between a rock and a hard place.

Tomorrow's World, Today

When we look at the big technology spend on R&D in the last financial year we see Samsung spent $10.5bn, Microsoft $9.8bn, Google's $6.8bn, Sony's $4.6bn  and Apple's $3.4bn. A staggering total of some $35.1bn. So the obvious question is what is coming out of the spend and will it change our lives in the near future or is it still some way off making it to the market?

If we look at the current projected innovation we see two potential systemic changes, one that still appears unclear and one that is clearly some way off.

Turning Pages

The Samsung Galaxy S IV is scheduled to be unveiled this month and there are very strong rumours that it will extend the ‘Smart Stay’ feature which detects whether the users is looking at the screen to a new feature that will allow the phone to track the movement of your eyes down the screen and effectively scroll or turn pages without any fingers! This is a significant step when it comes to reading and starts to change the way we read. Imagine no more turning pages and the previous page turner really does become automatic.

This along with the other Samsung technology could start to differentiate it from the pack and given their cross Galaxy approach would make their Note and tablet offers very appealing.

I watch, I record

The Apple Glass project has seen considerable coverage and as it gets closer to the expected launch later this year the noise about it is only going to increase. The glasses are designed, futuristic and comprise a number of parts. They are even reported to come in different colours and there may well be deals pending with major glass designers to make them even ‘cooler’ tp wear.

They aim to lift the users heads from constant distraction of starring at a display to one where the display is closer to the senses and is shared with other activity. The main body of Glass is a soft-touch plastic that houses the processor, battery, and counterweight and then there is a thin metal strip that creates the arc of the glasses, with a set of rather typical pad arms and nose pads which allow the device to rest on your face.

Although it can be controlled by a touch sensor at the side or via defined head movements the Glass responds to and is aimed to be driven by voice commands. It gets its data via either its own Wifi or via a tethered device such as a smartphone and has a GPS chip.

We immediately think of the information benefit of seeing maps, getting directions whilst on the move but probably the most interesting feature will be the ability to take still or moving images as you see them by a single voice command. This obviously raises the question of privacy but also the ability to effectively upload them in real time to services such as Google’s own YouTube or Facebook, Twitter etc.  

Apple on the Wrist

We are less sure of the forthcoming watch with full iOS planned for later this year from Apple.

When we look at Pranav Mistry’s technology and ability to display on any surface we have to ask whether Apple are moving us forward in our interaction with technology or merely giving us designer blig?

We have to await more information but this would appear to be far behind both Samsung and Google in delivering us the future.

Microsoft’s Interactive Whiteboard

Whilst the other focus on the mobile world and making things smaller Microsoft continue to look at the larger canvas.

They are working on ‘SketchInsight’, which aims to redesign who we interact with data and access and present it. They are working on a more intuitive approach, which instead of forcing you to build a presentation in advance correlating the data and prettifying its presentation lets you call up pre loaded data to create interactive charts, maps and diagrams via a touch screen.

Whichever technology changes our interaction with and ability to exploit communications and technology is hard to call today but what is clear is that huge sums are being spent today in trying to invent the future and some will almost certainly succeed.

So What Does Nook Want To be When It Grows Up?

The news that Barnes & Noble’s losses in its Nook Media division will be higher than the previous year and that revenue projections for 2013 will come in significantly below forecast, raises the question of whether it is positioned to slug it out with the technology giants, expand internationally, or whether at some time soon it will have to exit the device market and focus on its content?

Only last year it secured an attractive partner and cash from Microsoft and later Pearson bought a 5% stake in Nook Media. So is this a blip, or a serious issue?

This dilemma was covered by the New York Times in their article ‘Barnes & Noble Weighs Its E-Reader Investment.’ They questioned whether the losses signalled ‘that the digital approach that Barnes & Noble has been heavily investing in as its future for the last several years has essentially run its course.’

The question is whether a move away from, what after all, was never their core competency or strength - technology engineering, to what is their core strength - trading content, will work with the market, their partners and the consumers?

If we look at the market Nook appear to have the bases covered with their platform and devices and content on offer, but have they?

First, we have said before that neither the Barnes and Noble or the Nook brand is well know outside of the US and their launch into Europe last year was too low profile and far too late. The ebook business is a global business and sitting in the US and expecting instant recognition could prove a fatal error of judgement.  If we were to ask consumers on the main city streets of Europe even today if the knew of Nook or Barnes and Noble, what would be the response? If we asked the same people the same question about Apple and its iPad, Amazon and Kindle and even Samsung and Galaxy the results are almost certain to be very different.

This would not be the same in the US, but although Barnes and Noble have dominated the book market, they have failed to dominate the ebook or device market. Is there any reason to believe that, if they can’t do it at home, they can did it abroad? Being a follower isn’t always good in a rapidly changing and costly market. Barnes and Noble are not technology innovators and also do not have the deep pockets of their competitors. Apple have their own environment which is constantly being fuelled by ‘fans’ and is about a family of strong global brands. They sell, or facilitate the sale of content and apps on the back of a robust end to end technology range. Amazon is the world’s largest online retailer of ‘stuff’ and have created an effective marketplace and service offer. They sell technology and services to effectively ‘lock in’ consumers to their ‘one stop shop’ marketplace. Samsung are like Apple, but are today’s leader of the significant Android pack and have yet to really score on the content side. They are clear leaders and are heavily tracked by a host of technology players. Blackberry and Sony are fast becoming an ‘also rans’. Microsoft have the ability, but often lack the execution. If the Slate would have been a full Windows 8 device and not yet another deviant the story may be different even today.

We must also remember that Barnes and Noble / Microsoft partnership which married an Android based technology Nook platform with a Windows 8 one with its own Slate device running under Windows 8RT. Not exactly a compatible marriage. Imagine feeding those profiles into an online dating agency and expecting to find the love of your life!

At the core of this turmoil is the reality, that even tablets as we know them today may well be transient. As the mobile range of devices continues to converge and more intuitive devices such as glasses and watches emerge to connect to mobile servers and the cloud, do we honestly think the Nook has the legs to compete as it stands today?

Nook Media needs to shift itself fully to cover what it says on the can – media. It is still in a strong position to build a retail, library, education offer that is device agnostic and free of the cost of competing with giants, yet agile and canny enough to licence and brand build a true competitor to Amazon. Consumers increasingly want a seamless one stop trusted shop that covers media.  

Although Kobo now has deeper pockets and is backed by a media giant it faces the same challenges and same opportunities. They do have a better global presence, but do not have the right market awareness and perception today. Consumers recognise that technology isn’t for life but they want to know that their chosen platform will be around for some time.

We hope that Barnes and Noble decide what they want to be when they grow up and effectively communicate it and take some fast and bold steps to set the on that path.

Pearson: Is Nook Investment Wise Dot Com?

It’s great that publishers occasionally back technology start ups and invest hard cash. It’s often easier for them easier to ‘sit on the fence’ and wait to see who wins, but by backing technology with cash and commitment it could be said that they are supporting, shaping and developing their future and not merely waiting for someone to do it for them.

We have seen recent publisher investments in self publishing, an area previously shunned and derided by the same people. Self publishing is hardly new, but clearly is potentially very different in a digital environment and offers both the author and reader new opportunities that hardly existed in the physical world.

Now Pearson has purchased a 5% stake in Barnes & Noble's Nook Media division for what would appear a significant $89.5 million.

We ask why, why now and is it 'wise dot com'?

Nook is hardly state of the art technology, nor is it a global device, or even a market leading store offer in its own back yard. Nook Media also faces many challenges ahead on its; relationships, technology, store offer and some would suggest that a 5% stake is hardly going to shake the tree, especially if Pearson is the lone publisher investor.

The relationship with Microsoft is somewhat unclear as Microsoft pin their future on Windows 8 and RT and their own Surface range. Nook has made it abroad, but is often seen as 'that other Kindle' in a market that has killed off many pretenders before it. Technology prices are tumbling and devices continue to consolidate and the Nook only competes in the shrinking ereader and tablet worlds and has no smartphone or higher spec ultrabook offers. Can Nook really compete with the technology giants across such a narrow range and given their shallow pockets?

The Nook, or B&N store, is just another ebook store with little social or discovery pull and importantly it can't leverage what the consumer doesn’t know outside of the US – the Barnes and Noble brand.

We all know that Nook needs the cash, but why now, why Pearson and why only 5%?

The merger of Penguin and Random House makes the move now more confusing and suggests that the play may be more about education and academic than trade. However, Pearson has other investments in this area and a Nook Media offer could be confusing to their Coursesmart partners.

Perhaps, we shall so discover the logic of the investment, but in the meantime B&N will be grateful for some seasonal support, cheer and investment.

Just Give Me The Right eReader?

Technology doesn't stand still and today’s desirable device soon becomes tomorrow’s yard sale or land fill.

When the first eink readers appeared they were novel, functional and expensive. They promised much and helped kick start the ebook movement. We now take them for granted, but they were always very limited in their scope and monochrome in the offer. We often referred to them as the ‘lookie likie’ devices, which  all offered the same experience, the same technology’, all promised to be the next biggest player, but all looked the same. We soon saw the casualties, as one after another they hit the wall and their technology started to follow eight track and cassettes and became history. Forget the recent claims made by IHS iSuppli of reader decline, what remains today are, the Kindle, Nook and Kobo and are becoming less a desirable present,  but more of an  unwanted one.

The tablet changed many people’s perception of mobile computing and playing media on the move. The iPad became the must have device and although many competitors appeared, few could compete with the Apple offer. However, as with all technology the serious competitors are now muscling in on the market and starting to redefine the tablet from their own perspective and in doing so offer real alternatives. Samsung clearly offer convergence from the smartphone through the tablet, ultra book, laptop to the TV, their pen technology is a clear winner and they continue to grow across all devices.  Microsoft have thrown the hat in the ring with Windows 8 and RT plus Surface. It is questionable whether Surface, as it stands today, will attract enough with its limited offer. However, Windows 8 is the key component and if as expected and by being pre installed and performing, it starts to dominate the ultra book and laptop market, it could strongly influence the smartphone and tablet markets and become a serious third player.

They are wild cards out there and Amazon’s holistic offer and Fire is a serious contender. They may appear to be ‘cheap and cheerful’ tablet, but by locking in purchasing benefits to the devices they will remain a contender. However, it is harder to see Nook and Kobo in the same league and playing catch up may be a step to far and maybe this is where they fall out. Nook and Microsoft could re-emerge, but it is hard to see how that will happen in the short term and today is about short term plays.

The real markets to watch are at either end of the mobile platform not in the middle. The Ultra book offered so much, but was upstaged in yesterday’s beauty contest by the bikini clad iPad. The ultra books were over priced, still wedded to the laptop form and burdened with legacy operating systems. However, we are starting to see real changes here with the emergence of hybrid convertibles – an ultra book with full office and PC strength, which flips into a tablet. The Surface was a perfect form, but unfortunately limited itself to the tablet internals. Samsung and others are close to delivering the answer and when it happens and at the right price then the market will change and business not consumers will drive that change. There are enough players out there to fix the price issue and that need to create the right device to ensure their own survival.

At  the other end of the sandwich we have the smartphone, which is no longer a mobile but a computer in the pocket. The Samsung Note II is a classic forerunner for what must happen next – the convergence of the mini tablet and the smartphone. Apple must have one in prototype and finally drop this nonsensical division between two devices, where the only real difference is the ability to make phone calls! The real challenge is getting that something extra inside the box. Voice appears to be a given and Apple have the lead there, whilst Samsung’s pen is both incredible to use and they have the lead there. We see these being the two contenders today and because they play on all the device platforms, they well positioned and are the clear favourites to succeed in the short term.

However, the other emerging driver is the cloud and the opportunities to de clutter the device of everything but the basics. Those ebook readers that boasted they could store thousands of books are fast becoming dinosaurs living in a forgotten time and saying the wrong message. We are now moving to  an on demand 24 x 7 with access to everything and subscription services replace outright purchases for what is an access licence after all. These change not only how we consume media, interact, purchase services but the devices themselves.

Finally, we have the ‘Ray Hammond’ mobile server that we wrote about earlier this month. The smartglasses are almost here, the intuitive gesture detection is still in the labs, the Bluetooth and wi fi connectivity is here. It’s now more about the packaging and creating consumer demand that will be the challenge.

Sacha Baron-Cohen in accepting his Lifetime Comedy Award this week, did so as his character Ali G. He took a humorous retrospective look at the changes since he last played Ali G some ten years ago, ‘there was no iPhone, no iphone 2, no iphone 3, no iphone 4, no iphone 5 and I wonder what is next?’

Perhaps its time for a step change in 2013?      

Gesture Technology Still Does Not Live Up To Mistry's 'Sixth Sense'

Ever since we saw and first wrote about Pranev Mistry’s now famous TED presentation on his Sixth Sense device we have been waiting for it to come to market. The technology interface we have today is staid and cumbersome and smartphone ‘pinch and zoom’ technology and Samsung’s Note pen are now starting slowly to break new ground.

Microsoft have now produced a Digits prototype with the aim of creating a mobile device that enables its owner to control a range of equipment through hand gestures. Digits is designed to be the next generation of the sensor gloves but leaves a big question as to whether its design is still to cumbersome and unattractive to capture the imagination of the consumers.

However, some experts question whether consumers would want to wear such a device during their day-to-day activities.

A video showing off the product has been posted online.

Digits’s camera-based sensor detects infrared light and together with software constructs a "fully articulated hand skeleton", which by measuring the distance between fingers a thumbs, can be determine, interpret and  understand what the user's hand is doing.

They aim to reduce the component parts such that the device could be the size of a watch, worn constantly and enable users to be able to interact spontaneously with their devices using simple gestures and not even touch them. Some of the gestures sound exciting; twisting an imaginary dial to turn up the volume, playing video games without a console by creating recognised gestures, tapping fingers on an imaginary smartphone pad to dial a number, closing and opening documents by clenching and opening your palms.  

So will Digits succeed to start to establish Pranev Mistry’s Sixth Sense world of become another games extension? If it can become device agnostic it may stand a chance but again will Microsoft tie it too closely to selling their devices and their operating systems?

We must remember Digits is only a prototype so has a long way to go but that Pranev Mistry showed us clear direction and better application over two years ago.  

Xbox Bets On Zune Media Tunes

Microsoft continues to seek ways in which to join the media delivery party. They have tried devices, mobile operating systems, apps, services and have had one notable success – the Xbox.

The Zune Media service was a flop and discontinued earlier this year along with the device. Microsoft then went on to help create Nook Media and before Nook has taken off, we now have the news that Xbox Music will be available on the Xbox 360 games console this week and available on Windows-based devices once Windows 8 is released later in the month.

With a database of some 30 million tracks, the Xbox Music catalogue claims to be larger than even that of Apple's iTunes, which only has a mere 26 million tracks. But is volume enough when we are talking of a greater depth of music than even the connoisseur would expect?

However, like Spotify before it, Zune Media will offer a free version of the service, enabling users to stream music, with adverts appearing every 15 minutes. This may not be what Xbox users expected but Microsoft have carried out research which claims that some 60% of Xbox owners time on their consoles is spent using entertainment services rather than playing video games. Does this therefore mean that the consoles could become a sort of media tablet or platform? After all if one has invested in the console why buy another device to do the same and if that is the case why not use Zune Media for music?

So the Xbox can support Netflix, BBC iPlayer and sports TV network ESPN and now Zune Media and the obvious question is how this fits with Nook Media and ebooks?

The challenge, maybe to not build on the Microsoft brand, but to redefine it cleanly around the Xbox itself. However, naming the new service after a 'dead duck' is not a good omen on a service which is clearly about collections that are meant to last even if they are on-demand. It also begs the strategy direction Microsoft aim to take with Nook Media?

Barnes and Noble, Nook and NEWCO Come to UK

How many consumers know of Barnes and Noble in the UK? True those who have been to the US may be familiar with the stores, but in the main the ‘world’s largest bookstore’ has until now operated within the US and is relatively unknown in Europe. Neither is the Nook any better known outside of the US.

So it was interesting to read that they are finally venturing outside of the US and launching their digital Nook platform and devices in the UK next month.

Then we have that very interesting developing partnership with Microsoft and the new venture currently under the wraps of the name NEWCO. This venture should take over the NOOK and campus store business from Barnes and Noble and enable that other perennial latecomer, Microsoft, to get into the ebook business – again.

The challenge is not finding UK retail partners, and money can always be spent to promote the launch but who is the consumer dealing with? Barnes and Noble, Nook or NEWCO and will they have to rebrand if NEWCO happens?

The press release was brief gave nothing but we can’t help quoting from it on the statements on the NEWCO situation and what must be the longest sentence ever written,

Such statements reflect the current views of Barnes & Noble with respect to future events, the outcome of which is subject to certain risks, including, among others, the general economic environment and consumer spending patterns, decreased consumer demand for Barnes & Noble's products, low growth or declining sales and net income due to various factors, risk that international expansion will not be successfully achieved or may be achieved later than expected, possible disruptions in Barnes & Noble's computer systems, telephone systems or supply chain, possible risks associated with data privacy, information security and intellectual property, possible work stoppages or increases in labor costs, possible increases in shipping rates or interruptions in shipping service, effects of competition, possible risks that inventory in channels of distribution may be larger than able to be sold, possible risk that returns from consumers or channels of distribution may be greater than estimated, the risk that the expected sales lift from Borders’ store closures is not achieved in whole or part, the risk that digital sales growth is less than expectations and the risk that it does not exceed the rate of investment spend, higher-than-anticipated store closing or relocation costs, higher interest rates, the performance of Barnes & Noble's online, digital and other initiatives, the performance and successful integration of acquired businesses, the success of Barnes & Noble's strategic investments, unanticipated increases in merchandise, component or occupancy costs, unanticipated adverse litigation results or effects, product and component shortages, the potential adverse impact on the business resulting from the review of a potential separation of the NOOK digital business, the risk that the transactions contemplated by the partnership with Microsoft to form Newco, including with respect to any spin-off, split-off or other disposition by Barnes & Noble of its interest in Newco, are not able to be implemented on the terms contemplated or at all, the risk that the transactions do not achieve the expected benefits for the parties. 


An interesting piece in bloomberg on the relationship and Barnes and Noble -  Barnes & Noble Investor Elation With Microsoft Deal Fades

Living In A US Centric Digital World?

Some would suggest that Barnes and Noble were never awake to the fact that the world didn’t stop at the Eastern seaboard of the US. Maybe they could have forged an alliance with the likes of Waterstones, Folyes or a European retailer and shared their international platform. If they had maybe they would have made a bigger digital penetration with their US centric Nook and they may have even had developed some real consumer awareness outside the US .  Instead they choose to stand firmly on US soil, as if they had returned to the Dark Ages and to had declare the world was flat and not round. The mistake has been sufficient to loose them a significant battle in their war against all their other competitors and forced them into a ‘catch up’ position.

This week the Newco, or whatever the baby that is conceived from the Microsoft and Nook liaison is to be called, announced a global programme. The Bookseller reported that the Newco now plans to launch digital bookstores in 10 countries within the next 12months and already has distribution agreements in place to facilitate Nook sales this year.

A week earlier, its Newco partner Microsoft, announced its tablet which is aimed to compete head to head with Apple’s iPad. However, Microsoft didn’t offer Newco and Nook the platform and like their treatment of Nokia on Windows 8. Some would suggest that this clearly shows that Microsoft will steer their own path, with or without their partners interests always being considered. Marriages of convenience sometimes turn out to be just that and not sustainable over time.

Meanwhile now that we have some 9 titles live on Kindle’s KDP platform we thought it was time we put our new digital publications on other platforms. Well Kobo in their own Canadian way appear to say a lot, but don’t make it easy. It is as if every applicant has to be personally vetted and the Canadian process is never quick unless you happen to be Canadian. Barnes and Noble’s ‘Pub It’ was more like a how ‘not to Pub It’. It works great in the US but like Barnes and Noble fails miserably when it comes to travelling over water. To demand US bank accounts, US addresses and pay overseas accounts by US Cheques is either just plain stupid or arrogant in the global economy. We hear that we are not alone with UK developers also questioning the US centric stance at a recent UK Nook developer conference.

Again Barnes and Noble or Newco are not alone and Kobo also have a somewhat weird affiliate strategy which is biased towards effectively handing over the affiliates customers back to themselves if they don’t maintain their sales. It’s as if the WHS deal was done with little thought on how to accommodate others at a later stage.

It is also frustrating in commenting on this unequal world when we are often bombarded with advice and insights from the industry which only apply to the US experience.

People complain that Amazon has too great a stake in the digital market but it hardly surprising given the ineptitude of the competitors to understand and accommodate those who merely wish to self publish as a small publisher or author, or act as an affiliate or developer and happen to be outside of North America.

We would love them to say we are wrong and would happily retract our claims and use their services…

Maybe Microsoft could have a Huge Role in Publishing?

The news that the lumbering giant Microsoft has once again entered the ebook world raised eyebrows, created much chatter and was certainly welcome at Barnes and Noble and especially with their investors. Leaving aside the obvious college and educational opportunities and their need to get back onto the mobile saddle and create something with their Nokia alliance, what could Microsoft do that would really make a difference and give them pole position in the hearts and minds of those in the digital world? The iPhone and iPad have catapulted Apple to the premier device position, Android has made Google more than just a search engine and Chrome has grown in the browser world. Microsoft must act or be relegated to playing in the lower divisions.

We thought about many angles, but the one which screams out to us is to their ability to leverage their dominant position in the ‘office’ product area. This could also defend it against the increasing ‘open source’ world pretenders and take it to a new level of ‘must have’.  Today Word, Excel, Powerpoint remain the de facto office and home document creation applications. However, they remain wedded to the past and exposed in the future. In reality, they haven’t developed significantly for over a decade and are in desperate need of more than a lick of paint.

So what would we do if we were Microsoft? Obviously they will do their best to be a white knight to publishing against the forces of evil but can the do much more? How would we secure their future? What would be the lead strategy that would pull-through other ‘publishing benefits? Simply competing on the OS platform isn’t going to do it. Lining up with Barnes and Noble is like going to support a mid table team – they may make it, they may win some games, but they are unlikely to dominate through Microsoft support alone. Nokia is a great partner, with a strong history of achievement, but they too are desperately looking for partners to shore up their future and have also made some bad calls over OS platforms which have cost them dear.

Our approach would be a return to the basics and play to their strengths. This would recognise that everyone today wants to express themselves and have a voice. If Office were to be able to output word documents in epub compliant tagged format to an open XML rich schema - that could make a difference. If it also offered content output rendered to HTML5,that too could make a difference. If it could ingest current word based documents and render them to ePub or HTML5 that could make a difference. If it offered collaborative editing at a premium within an XML construct that could make a difference. If the schemas were open and also able to be expanded and adapted that too could make a difference.

This would not negate Adobe’s role in complex constructs but would enable the feeds and the vast majority of works to circumvent conversion effort and be immediately publishable. It would enable the authoring and ultimately reading and it will engage a wide audience. Now take one step further and ensure any document that is exported is correctly rights tagged along with any inserted documents, pictures, audio, tables etc and we could be talking about the democratisation of publishing fro the author to the reader.

Some may say that we are dreaming but I bet we aren’t the only ones…

Microsoft Return to eBooks Via Nook

The breaking news that Microsoft have bought heavily into Barnes and Noble to create a new venture which encompasses their Nook, digital and college business is shall we say a surprise and a significant move for both parties. Microsoft will invest some $300 million for a 17.6% stake in the new venture which will be valued at some $1.7 billion.

Obviously, the dust has to settle and much has to be revealed, but it has obvious to many that B&N needed a partner with clout and deep pockets and Microsoft certainly can bring that to the table, but they also needed a global partner and Microsoft ticks that box too. Microsoft also needed to get back into the mobile marketplace but had previously walked away from ebooks at  that famous BEA in 2008 when they literally dropped Windows BookSearch.

So B&N divides, its business gets some cash, raises its valuation and gets a big brother with only a minority stake today and potential for more investment in the future. That is certainly good business for B&N and one which must seem like Christmas to their investors.

The questions are now about speed, focus and how Microsoft’s interests are projected onto an Android platform. We still have to see how the international offer develops and the sixty four dollar question remains over Microsoft’s sticking power and whether if the going got tough they would simply walk away again.

Microsoft to 'Silently' Kill Off IE6

The number of browser we have to support may be small but the versions within these can be a pain as new versions of some browsers appear to be arriving on a constant conveyer belt. Most users are cautious about upgrading until the release is bedded down and stable, but buyers of new PCs don’t have much choice.

Microsoft claim that their research shows that many cyber criminals target old or outdated software when they tried to trick people into installing fake updates. Therefore, in order to help beat scammers catching people out with fake updates, Microsoft will start next year to ‘silently’ update Internet Explorer (IE) users automatically without their users knowledge to the latest version of the browser. Microsoft said that those who did not want their browser updated could opt out or uninstall the software.

The programme will initially affect IE users with automatic updates turned on and running Windows XP, Vista and 7, and will first be rolled out in Australia and Brazil. Those using Windows XP will be upgraded to IE8, while those on Vista and 7 will be upgraded up to IE9.

Globally, Internet Explorer is still the most popular browser, with more than 52% of the market followed by Mozilla's Firefox and Google's Chrome. Interestingly though some 8.3% of IE users are still wedded to the 10 year old IE6 which, to the relief of many developers, is expected to die with this new initiative.

Skype Today, MSSkype Tomorrow?

Luxembourg-based Skype and its 663 million global users has been bought by Microsoft for a rumoured $8.5bn. Some would suggest that’s a high ticket for an eight-year-old company and a very high ticket for one that has yet to make substantial money.
eBay bought Skype in 2006 for what was then a lot of money $2.6bn and then sold it in 2009 for just $2bn. So what has changed and why is Microsoft allegedly paying over 4 times what Skype was sold for only two years ago?

Does Microsoft see Skype as a means of getting into the living room and marrying Xbox Kinect and HD television. Are they thinking about home education, remote learning, remote patient home care? Are they buying it to take on the teleconferencing business market? Do they see it as a way back into the mobile world with an alignment Windows Phone 7?

Whichever is the driving motive it’s a lot of investment that will need to deliver real return. Microsoft investors are certainly going to want answers and will ask how an open platform such as Skype is going to deliver exclusive revenues.

Businesses such as ours depend heavily on Skype today to perform global business communication. If Microsoft were to install a toll both and wrench up the payment side, people will just go elsewhere. So the difficulty maybe, will be the integration of Skype into paid services that can then build the revenue.

The big question is whether you need to spend $8.5bn to achieve that?

Will Kinect Be Bigger Than Tablets?

Speaking at a lunch held in Sydney by the Committee for Economic Development of Australia (CEDA), Microsoft ‘s chief research and strategy officer Craig Mundie, has predicted the death of tablets and claims that their existence will be short lived as they get squeezed by the ever decreasing gap between smartphones and laptops. He said, "I think there's an important distinction - and frankly one we didn't jump on at Microsoft fast enough - between mobile and portable,"

So is he right or wrong and is it merely a push to get PR or a genuine vision of change?

What we do know is that the tablet is consumer market’s hot device today, but that means little as technology can change so fast. We know Miscrosoft is working to get their own tablet OS out this year but that they pulled the plug on their own Courier tablet last year.

Mundie admitted Microsoft’s failings but that they are determined to go after the smartphone market and even envisages a phone that beams light directly into your retina so you can view HDTV.

As for desktops, Mundie predicted, " the successor to the desktop is the room, that instead of thinking that the computer is just something on the desk that you go and sit in front of, (in the) future basically the whole room is the computer and you go in it."

Mundie discussed the Xbox 360 Kinect motion-sensing accessory will be be soon offered for the PC. This could be very interesting as it starts to free the computer interface and make in more intuitive using gestures and voice commands, or what Mundie calls this the "natural user interface". This could revolutionise many aspects of technology and human interface such as teaching, healthcare etc. This by itself could change the way we look at and interface with technology and even support some of the thinking expressed by Mundie re tablets.

Mundie predicts that within five years computers and televisions would be sold with Kinect sensors built in.

Zune Today, Gone Tomorrow

Microsoft may have made history with the sales of their Xbox Kinect but it appears the writing is on the wall for their Zune media players.

In 2006 when MS CEO Steve Ballmer released the Zune, he predicted that Microsoft could one day overtake Apple. What a long time four year is in today’s technology.

An unnamed inside source has been cited by Bloomberg saying that MS is not going to extend the product further. The media player market has clearly moved on and Zune has failed to move with it. Today the smartphone is the media player and that is why MS have turned their attention to their Windows Phone 7 OS platform.

Microsoft Out To Spoil The Rise of Android

Microsoft has reportedly come up with a new way to compete with Google and that is to charge royalty fees to prevent the likes of Acer from adopting Android and Chrome OS in their netbook and tablet offerings. Interestingly, Microsoft has chosen to charge the manufacturers and avoid a direct fight with Google.

Microsoft plans to impose royalties of US$10 to $15 per handset "for using its patents in e-mail, multimedia and other functions." HTC is apparently paying the fees and some suggest that is because it was cheaper than a lawsuit and that could retrieve the money from Windows Phone 7 licensing deals.

So why is the open source market so upset by this latest move by Microsoft? The answer is that the royalty is claimed against patent usage not the software used as the software is open source and has not licence fees!

Today everyone is patenting the future, and then suing when everyone makes it to the obvious next step. Microsoft has already been found guilty of predatory practices in violation of anti-trust law and some would suggest it's patents could become unenforceable if they are found to be abusing them. Some suggest Microsoft is aiming to head off what seems a tide of manufacturers adopting Linux OS on mobiles, netbook and tablet devices. If Microsoft loses this new market it will be severely restricted to the PC segment and their operating system monopoly.

Microsoft’s big problem is that they have to support layers of legacy. Today nobody needs to upgrade their OS to the latest Microsoft offer except when they buy a new computer. This breaks their old model and significantly dilutes the opportunity to pull through an Office upgrade sale.

So we now have Windows 7 and importantly Windows Phone 7. Will Microsoft succeed in thwarting the Google movement or are we starting to see the real demise of a technology giant of yesterday?

Tablets Slate 'Lookie Likie' eBook Readers

It’s a new year and as always the Comsumer Electronics Show in Las Vegas is bombarding us with new ereaders, tablets, mobiles, TVs etc.Today we see the start of the beginning or the start of the end of some ebook devices. This year will certainly be the war between the dedicated ebook device we have long stated as a transitional device and the emergence of the tablet, online reading and the cloud.

Steve Ballmer, CEO Microsoft announced an that Apple isn’t going to have the slate to themselves and that Microsoft are not only serious about tablet they want to be there first. They showed a yet to be released HP’s 10” touchscreen tablet running Windows 7. The claims made would appeal to all, with it being ‘almost as powerful as a PC’, ideal for web, reading and entertainment. Bing will be the default search engine while MSN will be set as the default home page.



Ballmer showed 3 modes – movie, book (running Amazon’s Kindle software) and PC. Ballmer however did not reveal any details about the specifications, pricing or launch date, but said two other 'slate PCs' from Pegatron and Archos would run Microsoft software.

The HP tablet is a basically a color e-reader runningAmazon Kindle software, with few other details besides a sub-$500 price point and an estimated arrival on the market by mid-2010. Microsoft's CEO also briefly showed off two other similar products, one from Archos (which was running a movie, hence focused on multimedia) and a larger-screen slate from Pegatron, for reading newspapers and magazines.

Another tablet is this sneak preview of the Dell Streak - a 5” touchscreen, Android based tablet offering. The question is whether it is a tablet and iTouch with its 800 x 480 resolution screen, Bluetooth, 3G, a 5-megapixel camera with LED flash, a microSD card slot and Wi-Fi?.



This next video shows new Android based eBook reader, the enTourage eDGe at CES. The device combines a full-sized ebook reader screen with a second colour screen designed for the internet, to play movies, and much more. We apologise for the ad material on the video but think the content is worth a view.



So would you buy a Kindle DX, an eInk 'lookie likie', a tablet, a mobile or wait for Apple to fire its salvo later this month? Whatever its clear that eInk is looking drabber and the devices more limited by the day.