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Thursday, May 3, 2012

Thoughtful Thursday - The E-reader War has a New Player

According to data gathered by the Atlantic, Lexington, KY has purchased the most Kindle e-readers, which makes it the most e-literate city in America. On its heels are Ann Arbor, Michigan and Anchorage, Alaska.  However, now that Microsoft has entered into a deal with Barnes & Noble, which will make the Nook the most compatible e-reader with Windows, do you think the landscape might change?

Currently, it is the college towns that purchase the most Kindle e-readers.  Major metropolitan cities like San Francisco (57), Seattle (42), Miami (87), Chicago (45) and LA (86) get crushed in these rankings.  New York, one of my favorite cities, came in at number 16.  Cincinnati, the nearest metropolitan city to where I live, came in at number 36.  The cities that purchased the fewest number of e-readers are Fresno, Las Vegas and San Diego.

Since I really doubt reading is the first thing that comes to people's mind when they think of Las Vegas, I don't envision that particular statistic changing much in the future.  As a state, California has the most cities in this list of 93.
The survey goes on to compare the resale market for e-readers by stating that Kindle currently has 60% of this secondary market (think eBay), the Nook 40%, and Kobo barely registering on this scale.  If Microsoft and Barnes & Noble have their way, this number is going to change for the Nook.  However, when the article next compares e-readers on the secondary or resale market against the iPad--Apple wins taking 80% of the market while both the Kindle and the Nook sit below 20%.

So, how might this change in the future?  In case you didn't hear, Microsoft has entered into a deal with Barnes & Noble and their Nook.  An article in the New York Times, published on April 30, states, "The deal, which gives Microsoft a 17.6 percent stake, values the Nook unit at $1.7 billion — roughly double Barnes & Noble’s entire market value as of last Friday (Apr. 27, 2012) — and bolsters the bookseller’s efforts to make its digital business the linchpin of its future growth."

For this deal, Microsoft is looking to its future, and the future of computers, which includes Web browsing, movie watching, book reading and other multimedia activities.  No longer is the computer primarily used for word processing and spreadsheets.  This brave new world puts Microsoft "squarely up against Amazon, with its popular Kindle devices, and Apple, which has had runaway success with its iPad."

The article goes on to say, "Barnes & Noble will also produce a Nook app for the forthcoming Windows 8, a revamping of the Microsoft operating system that will take advantage of touch screens. While Windows 8 will have an app store, analysts expect it will need to be more tightly coupled with a service for buying books and other forms of entertainment to better match the offerings from rivals.

In turn, the bookseller will capture additional points of distribution from hundreds of millions of Windows users around the world, potentially reaching consumers who did not associate Barnes & Noble with e-books.

James McQuivey, an analyst at Forrester Research, said he expected that Barnes & Noble would eventually create a new line of Nook devices based on Windows 8 that will offer a closer marriage of hardware, software and content services.

Under the terms of the deal, Microsoft will invest $300 million in the division, and it has committed to paying an additional $305 million over the next five years, part of which serves as an advance against future revenue and part to finance the Nook’s expansion into international markets. The partnership is not exclusive to Microsoft, meaning that Barnes & Noble can still pursue other alliances with the likes of Google."

William J. Lynch, Jr., CEO of Barnes & Noble, has indicated that the digital business would remain closely linked to the brick-and-mortar stores that long made up Barnes & Noble's empire.  Reportedly B&N has 691 retail stores and 641 college bookstores.

Although I'm a Kindle fan, the Nook has a lot going for it, and with Microsoft adding a little of its muscle to the device, I'm expecting many positive changes in the future.

For a more detailed analysis of e-reader purchases, please visit:

For the New York Times article, please visit:

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