Barnes & Noble is expected to announce a new version of the Nook Color tablet on Monday, which will compete directly against Amazon's new Kindle Fire. But without Amazon's rich ecosystem of content, Barnes & Noble needs to double down on its strengths to avoid becoming irrelevant.
The Nook Color is "the reader's tablet." The Fire isn't. That's where Barnes & Noble can stay strong. The Nook Color started the e-reader-to-tablet transformation, but ultimately Barnes & Noble doesn't have the content ecosystem to compete with Amazon on anything other than e-reading.
The Nook is part of a material transformation of Barnes & Noble's business, similar to what's happening to Netflix. We're going from paper books to e-books and from renting DVDs to streaming video. But that transformation is in terms of the medium, not the character of the business.
Barnes & Noble is a bookstore. The company can't forget that. Amazon didn't forget its strengths, which is why the Kindle Fire has so much buzz: it's a pipeline for Amazon services. Now that the Nook app is on every Android tablet, Barnes & Noble needs to emphasize why its tablet is best for its content—not for Netflix, not for Angry Birds, but for the billions of dollars in books and magazines that Barnes & Noble pays rent to display around the nation.
B&N doesn't have an established MP3 store, online video store, or app store. Consumers want an all-in-one experience with content at their fingertips. (And I don't think developers want yet another app store to sell to.)
Barnes & Noble could gain some success solely through name recognition by cobbling together existing Android services: Google's app market, Google's video store, Hulu, Netflix, and such. But then the company finds itself just fighting as a pure consumer-electronics manufacturer against a dozen other generic Android tablet makers with more experience, and the downloadable Nook app. To fight Coby on the low end and Samsung on the high end, without playing up your own strengths, seems futile.
The Reader's Tablet
Barnes & Noble is the little guy in its fight against Amazon, but little guys can win by turning the big guys' strengths against them—and in this case, the Fire's strength is that it's a multipurpose tablet.
I've never thought standard LCD screens are good for long-form e-reading, for instance. Transflective technology such as Pixel Qi hasn't yet been used in a major color e-reader, and it offers much better battery life and outdoor visibility, along with less eyestrain than LCD screens. (Yes, I called for Amazon to use Pixel Qi too, and they didn't. Their loss.)
Keeping the focus on reading, Barnes & Noble can expand the Nook's Web and social media features, too. "Social magazines" like Flipboard and enhanced RSS readers like Pulse bring readers content they want for free, using their networks of friends and favorite Web sites to aid in discovery. There's no way Barnes & Noble can match Amazon's accelerated, Flash-enabled Silk browser. But the company could work with partners like Readability and Instapaper to capture popular Web sites for easy, offline, handheld reading.
Can Barnes & Noble negotiate better prices for e-books, better deals with libraries, or better terms on lending and borrowing? Or could it crack the e-magazine code, offering an experience that's easier to use than Zinio's picky, sticky UI?
Every Bookstore an e-Bookstore
Think of new ways to merge the e-reading experience with brick-and-mortar, too. Barnes & Noble's brick-and-mortar presence could help it find an affinity with other physical retailers. I'd love to take an NFC-enabled e-reader to a newsstand or to a Hudson News at the airport and slap it on the counter to receive books, magazines or newspapers. (The newsstand would have an Internet connection hooked up to its point-of-sale system and NFC pad, probably all linked through a 3G modem.)
That not only merges the pleasant experience of real-life browsing with the speed and convenience of e-reading, it would enable a "buy almost anywhere" experience without the cost of a 3G radio in the device, and it would give those brick-and-mortar retailers a stake in the Nook's success. You could even buy your e-books with cash.
Keeping an eye on reading means Barnes & Noble can keep costs down. Amazon's Kindle Fire is made of powerful stuff, with a dual-core processor designed to handle multimedia streaming and games. A next-generation reader's tablet doesn't have to have that level of specs, so Barnes & Noble could undercut even Amazon's loss-leader $199 price. The company almost has to.
A real reader's tablet, at an unbeatable price, will keep Barnes & Noble playing to the strengths of its character, rather than trying to compete with stronger players elsewhere. That could prevent the Fire from burning Barnes & Noble's house down.