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Tuesday, November 8, 2011

Barnes & Noble Takes on Amazon in Tablet Wars

Posted By on Tue, Nov 8, 2011 at 3:00 PM


A quick scan of this New York Times blog post is all one needs to conclude that Barnes & Noble faces a major challenge against Amazon in the tablet wars.

Start with the picture, depicting B&N CEO William Lynch standing in front of a giant graphic showing that the Kindle Fire looks better -- or at least about the same as -- B&N's new Nook tablet. The opening paragraph mentions the price, $249, which is $50 more than the Fire.

Perhaps the most revealing thing about the post is when Lynch is quoted as saying: "The Kindle Fire -- and they do a lot of things well -- is a vending machine for Amazon services."

He presented that as a drawback. But the sad fact for B&N is that people really, really like Amazon services. The fact that the Fire is a vending machine for those services is a feature, not a bug. It's the reason Amazon invented the thing, and it's a reason many people will buy it.

Apple's iPad is overwhelmingly the most popular tablet despite, or because of, the iTunes store. And that tablet costs twice as much as the new Nook.

Tellingly, neither Apple nor the iPad came up much during Lynch's presentation. The Nook is aimed squarely at the Fire, as the two companies vie to become the chief iPad alternative. Both devices will be available to consumers in a week or so.

The new Nook does have some advantages over the Fire: Twice as much storage at 16 gigabytes and twice as much RAM at 1 gig. It's lighter, and its battery goes longer without a charge -- for reading, 11.5 hours compared to the Fire's eight hours.

But, it's $50 more, and once consumers have decided that they don't want to shell out $500 for an iPad, that $50 might make a big difference.

Lynch played up the fact that buyers can take their Nooks to any Barnes & Noble outlet for repairs. Which is fine, I guess, but who wants to hear about how the product they're being asked to buy is going to need repairs?

He also played up the "free" WiFi service that comes with the Nook. But it's free only at certain locales, like B&N stores and McDonald's. The Nook tablet is geared for streaming, not downloading, which will be a problem for at least some users.

In slamming the Fire for being a "vending machine" for Amazon services, Lynch said: "I'd say in a word we're more open." But neither the Fire nor the Nook tablet will give users access to the full Android app marketplace. B&N has partnered with Netflix and Hulu for video, and with Pandora for music. Amazon has its own store for that stuff, and it seems likely that such apps will eventually be available on the Fire, too -- especially if it proves to be popular.

Still, aside from pricing, the Nook tablet presents a decent competitor to the Fire. But the pricing is huge. I have little doubt that the idea of matching Amazon's $199 price point was debated at B&N and ultimately rejected as being too expensive. Amazon will lose money on each Fire sold -- the idea being to make money on content. Amazon can do that because it's in a much better position than B&N, which has to keep pouring money into what is fast becoming the ultimate legacy business: a giant chain of giant bookstores.

Dan Mitchell has written for Fortune, the New York Times, Slate, Wired, National Public Radio, the Chicago Tribune, and many others.

Follow us on Twitter at @TheSnitchSF and @SFWeekly

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Dan Mitchell


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