New Nooks Quietly One-Up Amazon, But Don't Change The Game For Barnes & Noble

With a few discreet press and analyst briefings but no song and dance event (ahem, Foo Fighters), Barnes & Noble has unveiled its new Nook Tablets: the 7-inch Nook HD and the 9-inch HD+. The prices of the devices range from $199 to $299, depending on the size and memory configuration, which makes them competitive with the Kindle Fire and far cheaper than the iPad (although a smaller, cheaper iPad could erode some of the price gap). The devices are lightweight, with high-quality displays and fast performance, outdoing the Kindle Fire on several specs. They now come with a video store, with content for rental or purchase from all of the major studios, filling a major gap in the previous generation of Nooks. The Nook software interface has been completely redesigned. My favorite feature of the devices is the "Profiles" feature--when you launch the device, you see profiles that can be customized for adults or children, down to custom content, browser settings, and store recommendations. This is a long-overdue feature in tablets: Forrester's data shows that 49% of US tablet owners regularly share their tablet with at least one other person.

Walmart and Target, having booted out Amazon’s devices, give B&N exposure to customers in 5,200 retail stores where Amazon devices won’t be displayed.

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Data Center Power And Efficiency – Public Enemy #1 Or The Latest Media Punching Bag?

This week, the New York Times ran a series of articles about data center power use (and abuse) “Power, Pollution and the Internet” (http://nyti.ms/Ojd9BV) and “Data Barns in a Farm Town, Gobbling Power and Flexing Muscle” (http://nyti.ms/RQDb0a). Among the claims made in the articles were that data centers were “only using 6 to 12 % of the energy powering their servers to deliver useful computation. Like a lot of media broadsides, the reality is more complex than the dramatic claims made in these articles. Technically they are correct in claiming that of the electricity going to a server, only a very small fraction is used to perform useful work, but this dramatic claim is not a fair representation of the overall efficiency picture. The Times analysis fails to take into consideration that not all of the power in the data center goes to servers, so the claim of 6% efficiency of the servers is not representative of the real operational efficiency of the complete data center.

On the other hand, while I think the Times chooses drama over even-keeled reporting, the actual picture for even a well-run data center is not as good as its proponents would claim. Consider:

  • A new data center with a PUE of 1.2 (very efficient), with 83% of the power going to IT workloads.
  • Then assume that 60% of the remaining power goes to servers (storage and network get the rest), for a net of almost 50% of the power going into servers. If the servers are running at an average utilization of 10%, then only 10% of 50%, or 5% of the power is actually going to real IT processing. Of course, the real "IT number" is the server + plus storage + network, so depending on how you account for them, the IT usage could be as high as 38% (.83*.4 + .05).
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Apple Maintains The Status Quo With The iPhone 5, But For How Long?

Apple's new iPhone 5 is a case study in incremental improvement. Nearly every aspect of the product -- the CPU, display, cameras, radio modem, size, weight, etc. -- are all improved over the iPhone 4S and at the same $199 price point. No doubt, the iPhone 5 and iOS 6 will sell millions of units, preserve Apple's momentum, and hold off the competition, but significant threats are mounting that Apple cannot afford to ignore:

  • Nokia is delivering Apple-quality innovation. As Nokia demonstrated last week at its Lumia 920 event, Nokia's innovation engine is firing on all cylinders. When the Lumia 920 launches (rumored for November 2), it will outclass the iPhone 5 in key areas such as imaging (PureView imaging, Cinemagraph) and location (Maps, City Lens, Transit) as well as bring wireless charging and NFC into the mainstream. While the breadth of accessories will be nowhere near what the iPhone offers, Nokia gets strong marks for showing Apple how NFC can enhance the accessory experience. 
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iPhone 5 Strengthens Apple's Leadership In The Larger Competition Among Ecosystems

 

To the surprise of no one, Apple today announced its new iPhone 5. Given that the iPhone 5 is unlikely to solve the European debt crisis or bring peace to the Middle East, it won’t be surprising if we hear a resounding "meh" from Apple's critics, with them dinging the company for a paucity of innovation. Indeed, competitors like HTC and Nokia have already offered some of the features that Apple highlighted today, such as those for imaging. But Apple still outpaces the competition when it comes to the entire package — the new iPhone unites significant improvements in industrial design, imaging, audio, and connectivity, along with the wealth of new capabilities that iOS6 enables. Apple will sell a boatload of iPhones — especially now that both Verizon Wireless and Sprint will have an iPhone (the 8 GB iPhone 4) for consumers' favorite price: free.

But make no mistake, this is not about the iPhone 5 versus the Samsung Galaxy S III or the iPad versus the Kindle Fire HD; this is about customers' attachment to the larger ecosystems that those devices inhabit. Amazon, Apple, Google, and Microsoft all aim to translate customers' investments — of money, information, personalization, and social connections — into a gravitational field of loyalty so powerful that few customers will ever attain escape velocity. This market is still taking shape, but the iPhone 5 will markedly increase Apple's pull, already the strongest out there. 

Amazon Fires Up A Strong Tablet Lineup For The Holidays

At its event in Los Angeles today, Amazon announced five new Kindle models: an ultracheap E Ink Kindle; a new "paperwhite" Kindle with a touchscreen and LED light to compete with Barnes & Noble's Nook with Glowlight; an update of its 7-inch Kindle Fire with improved hardware and software; and two "HD" models, with 7-inch and 8.9-inch screen options. Amazon also announced that it would offer its own basic data plan (through AT&T) for its 4G Fire--a very disruptive move that puts pressure on OEMs and carriers to offer their own lower-price plans, and sets the stage for an expected Amazon smartphone launch next year.

With these products, Amazon is:

  • Upgrading its devices to match its service. Last year, Bezos emphasized the service over the device, and that was key to Amazon's success--consumers buy tablets for what they can do with them, which helps  explain why Amazon is the No. 2 tablet brand in the US. This year, with features like Dolby Digital Plus sound and what it calls a "Retina-class display," Amazon is bringing up the quality of the hardware to match the service, which is good for customer satisfaction and good for perception of Amazon's brand. Adding features like a front-facing camera, gyroscopes, and location APIs make Amazon's devices more appealing to developers, too.
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Will Amazon's Deep Pockets Strangle Netflix?

IronMan2Amazon’s recent distribution agreement with Epix is a big threat to the dominance of Netflix in the movie streaming market.

Last year Netflix attempted to shift its business strategy to focus mainly on streaming video. Although I wasn’t present in the boardroom discussions, it’s a reasonable bet that Reed Hastings and his team had decided the future was online streaming and that physical discs were a dinosaur. Since the war for content would be fought over streaming, Netflix would focus on adding value to its streaming customers and spin off the disc customers. On the surface this seemed to many a reasonable strategy, especially since Netflix reported that its digital streaming customers and the disc-in-the-mail customers were mostly not one and the same. So Netflix execs crunched the numbers and decided this was the right move for them. Perhaps they had hoped to spin off the disc side of the business to raise some capital. Whatever their thinking, their strategy choices left some gaping unanswered questions for observers like me:

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