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.

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?