Wednesday, July 22, 2009

Barnes & Noble vs. Amazon

Barnes & Noble announced this week the launch of their eBookstore, selling digitally distributed books, akin to Amazon's Kindle service. B&N provides reader software for the iPhone/iPod Touch and Blackberry devices as well as PC and Mac operating systems. Their announcement also included a statement of a strategic partnership with Plastic Logic, whose e-Reader device currently under development will directly compete with the Kindle and Sony's Reader.

It is significant that, at least for the time being, Barnes & Noble is not manufacturing their own reader device. In the long run, I don't see the devices (Kindle, Plastic Logic) as the focus of competition for Amazon and Barnes & Noble. In fact, as e-book adoption becomes widespread, it wouldn't surprise me if Amazon got out of the business of device manufacturing entirely. Their long-term success is in the sales of the content, and it is here that they and B&N will compete: their online store experience and the service afforded to customers.

For example, the service that Amazon provides with distribution of content via cellular networks to the Kindle is terrifically convenient for consumers, and of clear value to those who wish to avoid having to sync with a computer. Cynics may point out that it is also a great way to lock-in consumers to the Amazon store, discouraging competition from others - and they would be right.

But while that sort of lock-in may be in Amazon's near-term interests, over time they will provide better service for individuals with devices other than the Kindle (they already have decent reader software for the iPhone). And though Barnes & Noble's electronic format is currently incompatible with the Kindle, I believe that in time consumers will demand choice here - to read their purchased content on whichever device suits them, regardless of the content vendor. Companies like Amazon and B&N will ultimately support that choice, because over the long term their success is in the sale of the content, not in the devices themselves.

Barnes & Noble's entry into this market is a good development for consumers. At the moment, the space is Amazon's and, to a lesser extent, Sony's. With a big player like B&N directly competing in areas of consumer service and convenience, Amazon will have good motivation to avoid complacency at the top.


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