Look! It’s The Hook Of The Nook
Tuesday, November 17th, 2009
By Ross Rubin, Executive Director, Industry Analysis
The uneasy relationship between digital delivery and physical stores has a steadily improving history. In 2004, as its Virgin Megastores were struggling, parent company Virgin funded Virgin Electronics, which quickly disappeared in 2005 in the shadow of the iPod. (My colleague Stephen Baker is quoted in this CNET-authored obituary.) Nintendo’s Wi-Fi connection took it to the next level, providing connectivity in retail stores for the Nintendo DS, but didn’t provide much differentiation for retailers. And while Apple provides free Wi-Fi in its stores, it instead partnered with Starbucks to offer a customized iTunes store home page that offered lists of recent songs for purchase playing in its coffee shops.
Barnes & Noble’s forthcoming Nook, though, will open a new chapter in terms of the integration of retail and digital content delivery. Unlike its competitor, the Amazon Kindle, the Nook has integrated Wi-Fi. And, unlike Amazon.com, Barnes & Noble has physical stores that offer it. Barnes & Noble is taking advantage of its storefront prominence in a way that the fractured music store retailer landscape could not have in 2001. Nooks will know when they are in a Barnes & Noble hotspot and gain access to book browsing capabilities and promotions that are not available when they are outside those confines.
It’s a simple win-win, providing more value and driving sales for the digital device, and driving traffic to the physical stores. While offering Wi-Fi for general customer internet access raises a host of issues, it’s clear that at least providing limited access to some devices can realize some of the long-discussed potential of kiosks.
There are clear lessons for other retailers of electronics and content. One obvious candidate would be Best Buy, which owns the Napster music service and offers Insignia-branded digital media players (but neither offers Wi-Fi in its stores nor Wi-Fi-enabled Insignia players). Another would be Sony Style; Sony offers a Wi-Fi-enabled Walkman media players and the Wi-Fi-enabled PSP and has a virtually unlimited selection of content to sample from its entertainment divisions. However, Sony has yet to address adding Wi-Fi to its Sony Reader devices.
The importance of offering added value and differentiation though Wi-Fi may grow in importance as smartphones grow to serve more entertainment functions in consumers’ lives. Retailers, particularly those who are vested in their own portable electronics and content initiatives, will have to raise their marketplace voices so as not to be frozen out in the power struggle among handset makers, operators, OS vendors, and Web properties.
Consumer Technology | Ross Rubin, Executive Director, Industry Analysis | 
November 17, 2009 12:06 pm
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