Navigation Buttons

Wednesday, August 3, 2011

Will Apple and Steve Jobs Buy Barnes and Noble?

I read the rumor first on FB from Tonya Kappes then on author D.D. Scott's blog. Here are my thoughts: 

In any market it is a waste to sit on $76 Billion in cash (think how little the return is on T-bills). Jobs needs to invest somewhere or he will be a poor steward of Apple's money (as in the biblical character who hid God's largess under a rock for fear of losing it). 

It makes sense, even if Apple is late to the party, to try to cut into Amazon's market. Apple is a successful competitor for Microsoft even though its market share in software is only a fraction of Microsoft's. Apple accomplishes this by the integration of software and hardware. Using Barnes and Noble as a platform could similarly give him the best of both world's, the touchy-feely of a retail distribution chain (for those of us who still need to touch and feel before we buy) and a credible internet distribution presence (hardware/software integration). 

Jobs has won before by making the user experience superior (ironclad Apple operating system) and by innovation (iPads, iPhones, music downloads). I would look for Apple to do the same with B&N's formative publishing systems. 

However, publishing and book selling are only tiny portions of what I think Apple will try to develop, IF they make the acquisition. It makes more sense to think of B&N as a platform to compete with Amazon across its entire distribution model. While Amazon is clearly the largest player in the world distributing goods and services in the fashion it does, even Amazon has only scratched the surface of the existing market currently handled by outlets with a real physical presence. That's where the integration of physical B&N distribution outlets and internet distribution begin to make sense for Apple. 

Cheers, Pete Grimm 

No comments: