by Leo J. Shapiro
The first week in November 2012 is a busy time for Microsoft. It is introducing its Window 8 operating system, its Surface tablet and has equity interests in two companies each of which are introducing new products: Barnes & Noble introducing its Nook HD and Nokia which is about to introduce its Lumina smartphone.
It is a particularly happy time for Barnes & Noble. Microsoft’s purchase of a 17.6% interest in the Nook Division of Barnes & Noble’s is roughly double the company’s total market value. In effect, Barnes & Noble’s 691 brick and mortar book stores are counted as a liability rather than an asset.
As explained in the article posted on 8SAGES.COM on June 10, 2012, Barnes & Noble does not make enough profit on books, food, and accessories to pay the rent on its stores. To support its stores, Barnes & Noble needs to expand its product offerings.
Selling the Nook was a major step in the direction of expanding Barnes & Noble’s product and service offerings. Looking ahead, selling the Surface tablet and the Nokia phones would be another major step toward expanding Barnes & Noble’s product and services offerings as well as a major way for these new products to reach and demonstrate their value to prospective customers.
With such expanded offerings, Barnes & Noble becomes a head-on competitor of the Apple stores and a solid market platform for reaching and demonstrating the features and value of Microsoft’s Surface tablet and its other electronic products as well as Nokia’s Lumina smartphone. Marketing the Nook gave new life to Barnes & Noble’s stores. When the Nook was first introduced, the 691 Barnes & Noble stores gave it a solid market platform which enabled it to reach and demonstrate its features and value to prospective customers. It demonstrated its competitiveness by capturing a large share of the e-book traffic business.
Short term, selling electronic touch-screen products and content in Barnes & Noble stores could make the stores profitable. Longer term, in the coming year or two, all the products mentioned will become obsolescent. This is good news for the companies who anticipate the next iteration of these products and bad news for those who do not.
Longer term, the odds are against the survival of the Nook, the Kindle, the Surface tablet and other devices that transmit text. Control of the retail market for electronic readers will go to the company that controls an innovated “reading device” that is inherently superior in value to those that are currently available.
To anticipate its nature of the superior e-reader requires understanding first how and why the value of an e- reader is determined by the ability of the words it contains to trigger memories of experiences that provide the user with information defined as that which is unexpected. Second, how the value of an e-reader is diminished by the amount of work or effort that the user must make to decode the words to reconstruct the experience and secure information.
The monetary value of an e-reader is the difference between its ability to communicate information less the amount of work or effort required to decode those words that carry the information.
Given the value of easing the task of decoding words, it is likely that current e-readers and physical books will be made obsolete by innovated devices that transmit not only words but also simultaneously transmitting auditory, visual, tactile, olfactory and visceral sensations which will ease the task of decoding.
A more detailed discussion of why current e-readers and physical books are obsolescent is included in the article titled “Why Barnes & Noble is Dying While Giving Birth to the Nook” posted June 21st 2012 on 8SAGES.COM.
The future of e-readers is also discussed in “Face to Face Communication at a Distance” in the forthcoming book with the working title “Yesterday and Today Bring Bright but Troubled Tomorrows” by Leo J. Shapiro.
Copyright 2012. All rights reserved by Leo J. Shapiro.