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Posted by Sarah Rotman Epps on November 7, 2011
Today Barnes & Noble (B&N) announced the Nook Tablet, a beefed-up version of the Nook Color that, in our view, gets everything right. My colleagues J.P. Gownder, James McQuivey, and I spoke with several product strategists from B&N about the Nook Tablet, including CEO William Lynch, President of Digital Jamie Iannone, and GM of Digital Newsstand Jonathan Shar. Our conversations and hands-on time with the device led us to conclude that the Nook Tablet:
Barnes & Noble’s story has implications for product strategists beyond the tablet space. Product strategists should look at B&N as a case study in “fast following” done right. Barnes & Noble wasn’t first to launch an E Ink eReader, but when they did, they improved upon the experience not just with better features (a touchscreen), but also with better services (e.g., the lending and social features of the original Nook). Similarly, with their tablet launch, they didn’t just improve upon feeds and speeds (although they did, with battery life, memory, and RAM that bests the Kindle Fire), they also improved the overall experience with the innovative “recommendations” feature integrated throughout the navigation. They are using their brick-and-mortar stores to their best advantage as well, offering free service, exclusive content, and full browsing over the free Wi-Fi network in Barnes & Noble stores—benefits Amazon can’t match.
Still, Barnes & Noble is David taking on not one but two Goliaths: B&N’s market cap is just $700 million, compared with $100 billion for Amazon and $370 billion for Apple. We think the Nook Tablet will be successful in its own right, selling 1.5-2 million units this holiday season on top of the estimated 5-7 million units sold to date for the original Nook Color. But Amazon, as we’ve said, will sell twice as many Kindle Fires, and Apple could sell as many as 20 million iPads globally in Q4 with 8 million sold to US consumers. In our September survey, we asked consumers considering buying a tablet what brands they would consider if they were available. Apple was No. 1 with 61%, Amazon was No. 2 with 24%, and B&N was farther behind with 6% of tablet shoppers willing to consider its brand of tablet (before they knew anything about what the product or price would be). This means that B&N is starting from a much smaller base of consideration, but with a solid product, a huge commitment to marketing (they’re tripling their TV ad spend this holiday), and a vast expansion of channel presence (2,000 sq-ft Nook stores-within-stores now under construction, plus 12,000 other retail channels), we think they will expand their appeal beyond initial considerers to take some tablet market share from both Amazon and Apple.
Photo credit: J.P. Gownder