Nook Gets Video: B&N Still Playing Catch Up Though

 

I guess this had to happen.

In the beginning, Amazon had a simple eReader, the Kindle. Then the iPad entered the market wanting to be many things, including an eReader. Barnes & Noble followed that up with its own eReader, the Nook. Somewhere in between Samsung and Google and everyone else released their own tablets – all based on Google’s Android system. And then, over the last year or two, both eReaders morphed into Tablets, underpinned by Google’s Android system. Then, Amazon upped the ante by bundling its Kindle tablet with unlimited video streaming (limited though to Amazon’s own online video library). Had enough? No?

Allrighty then. The latest salvo in the Tablet ecosystem wars is the announcement today that Barnes & Noble is developing its own online video library that its Nook tablets (and users of the Nook app on non-Nook devices) will be able to buy and stream. This streaming service is expected to launch this fall in the U.S. and the U.K. and will initially offer content from some of the premier content providers such as HBO, Disney et al.

On the face of it, the new service seems to include three different things – which make it somewhat Netflix-like (actually, strike that! The press release was vague here, but an article on All Things D states that there is NO subscription video streaming a la Netflix), somewhat Amazon-like and somewhat iTunes-like:

a) “In demand” content licensed from major studios:

Content Licensed From Major Studios Including HBO®, Sony Pictures Home Entertainment, STARZ, The Walt Disney Studios, Viacom and Warner Bros. Entertainment..

b) The ability to shop and buy, download and store TV shows and movies in a Nook cloud-based “locker”

and

c) The ability to shop for physical DVDs (and Blu-Ray DVDs) that are “Ultra Violet” branded so that customers have access to the physical disc and an online version of the associated movie in the Nook cloud.

Its also interesting that customers need not be using an actual Nook device to get (a), (b) and (c)- instead they can do all of this using a Nook app.

But this doesn’t fundamentally change the game in any way.

If anything, this allows the Nook to catch up with the Kindle because the Kindle already allows customers to buy shows and movies and store them in Amazon’s cloud. But the Nook user is still at a disadvantage compared to the Kindle user because the latter can access Amazon’s growing online video library for free, for now. And then, I am not sure how many customers will choose the Nook because of its Ultra Violet feature (not many, me thinks). [Perhaps Nook tablet users will somehow be bestowed with free access to Netflix to level the playing field (that, would be a coup for Nook and should make for some great optics).] The only tangible upside to Barnes & Noble is that Nook users that formerly spent money buying TV shows and movies on a Kindle or Vudu app will now instead do that in a curated Nook store allowing some revenue to captured by B&N.

Not much else. 

So the Tablet ecosystem wars can be fully expected to continue for a while.

Groupon To Launch National Restaurant Chain

 

Not really, but one could be forgiven that flight of fancy, given the moves it has been making in the restaurant (and small merchant) space. 

With its core business shrinking and its management style not really helping, the hunt has been on for diversification.

Attempt #1 a few months ago was Groupon Goods which seems to help merchants – both big and small – dispose off unsold inventory (and possible introduce brands to consumers at lower prices), a la Woot and to some extent, Overstock.com. Its most recent quarterly results in fact indicated that Groupon Goods was growing faster than its core business. On the face of it, this is good strategy – Groupon customers are already used to snagging deals for restaurants, etc., and they might be interested in buying real/physical things off of Groupon too. But unfortunately, retailing is a low-margin, hyper-competitive business. So tech-savvy retailers such as Amazon and its ilk (Amazon is already a major investor in LivingSocial) can be hardly expected to sit idle and it is likely that Groupon Goods may not (be allowed to) grow after a point.

(A pet first aid kit for sale on Groupon Goods recently)

Given the retailing environment then, it makes more sense for Groupon to leverage its existing scale (the number of sales people canvassing local neighborhoods in most major metro areas) and try to embed itself deeper in the neighborhood stores and restaurants space, or what I would call the “local experiences” (restaurant meals, yoga classes, circus tickets and such) space. 

And that is precisely where it seems to be headed by doing two things: (a) enabling more customer-merchant transactions and (b) making those transactions more efficient for merchants. In both cases, additional value is created and Groupon is positioned to capture some of that value.

Moving towards making transactions more efficient, last week, it announced its entry into the payment processing space and instantly took on Square and any number of other players jostling for their share of this market. Since most local merchants are super cost conscious, this gambit aims to cut their costs:

Existing Groupon customers that use the reader will pay transaction fees of 1.8 percent plus 15 cents for cards from Visa Inc., MasterCard Inc. and Discover Financial Services, For American Express Co. cards, fees will be 3 percent plus 15 cents. Card readers offered by Square charge 2.75 percent per transaction, while PayPal has a 2.7 percent fee.

A Reuters article details how Groupon is better for some merchants based on transaction size and how Square is better for others. With no clear leader today (Square is one, kind of, but it doesn’t have an insurmountable lead I think) and given Groupon’s scale, one could expect pretty decent market penetration for Groupon going forward. 

Then, in terms of enabling more merchant-consumer transactions, this week, it announced that it was acquiring an Internet-based restaurant reservation system called Savored - whose “reservations + discounts” model is something of OpenTable meets Hotwire, and

Savored is meant to supplement the existing Groupon Now service, which is aimed at giving customers a list of discounts should they decide to indulge in impromptu shopping.

So, where is Groupon headed? I don’t think it will launch its own restaurant chain, but, I am almost sure it will continue to make other acquisitions in the local merchant ecosystem (it does have some money in the bank, thanks to its IPO). Ultimately,

Groupon aims to reach a size where it will become the “operating system” for local commerce, as Chief Executive Andrew Mason put it earlier this year.

That, is what makes this a very exciting time to be in local commerce.

Mass retailing has see a number of improvements over the years – from Walmart’s highly sophisticated supply chain systems to Amazon’s own ordering and shipping/distribution systems – but local commerce was largely left alone.  Now, with Groupon (and its imitators), aspiring to become the Amazon of local commerce, this should change in the next few years with consumers and merchants both benefiting. 

 

Hotels and Wellness

 

In one sense, hotel rooms are not very different from each other. 

If you look beyond the brand and things like  signature color schemes, that is. So hotels try to differentiate themselves - especially with high margin business travelers and price insensitive leisure travelers (the thinking of course being that for budget travelers, a room is basically a place with a bed and a bathroom).

For the last few years, with rising health consciousness in the public’s mind, hotels and especially higher end chains have been trying to not only spruce up their gyms, but have also been trying to bring “healthiness” to the rooms (and increasing their pricing power) – primarily with in-room exercise kits and equipment (subject to space constraints).  

(Pictured above: A room at an exercycle equipped Westin in Atlanta, GA)

I wonder though how successful those types of rooms are…if they were, wouldn’t we have seen most major chains adopting and promoting these amenities more widely? Perhaps the vast majority of travelers are not that interested in exercising while traveling…

Now, someone called Delos Living (who has a number of high profile advisors, from what I can tell) is bringing us their first hospitality centric offering in the form of “Stay Well” rooms at the MGM Grand in Las Vegas (of all places) – rooms that offer more “healthiness” than your average room for $30 more a night, according an article in the Wall Street Journal.

Some of the features of course should probably be standard in every room in every decent hotel – lights that promote sleep, anti-microbial coating on door knobs and furniture and better room air filters. Some of the others like EMF shielding (?!!) may sound good on paper only though. 

Of course, like many innovations, the MGM is launching this as a pilot project  - since only 41 of its 5,044 rooms are going to be converted into this new format. But with Vegas’ casino and convention goers, I wonder if the industry and even the MGM can really use this as a barometer of guests’ valuation of these features and their willingness to pay $30 more a night for them.

Or maybe Delos hopes that this partnership and the resulting publicity encourages other chains try this model out in other major business and/or leisure destinations. My guess is that in the long run, customers will not pay $30 or whatever more for these types of rooms. Instead selected features from such experiments will most likely trickle down to standard rooms everywhere. 

And…we are back

(Rio, as seem from Christ the Redeemer)

Back from a two week trip to South America that then required nearly ten days to fully recover. As they say, travel broadens horizons and South America did that, and more – across three dimensions.

Understanding the story of business in Brazil and Argentina was the first dimension.

Meeting with some of the world’s largest petrochemical companies,

(Global HQ for Petrobras, one of the world’s major petrochemical players)

upstart airlines reshaping air travel and more broadly, travel itself in Brazil,

(Azul – think Brazilian JetBlue, same founder – Airline’s Embraer Flight Simulator)

venture capitalists that are further fostering (creating?) entrepreneurship there with a long term view, boutique wine distributors that are helping boutique Argentinian vineyards pry open large multi-billion dollar global markets, politicians that are trying to bring about innovation and change to some very entrenched and retrograde ways of doing things,

(Esteban Bullrich, Buenos Aires’ Minister of Education; 
Reforming ~ 740 Schools, with 50,000 teachers, in Buenos Aires)

understanding how political decisions and (mis)management can cause “black market” currency exchange rates that are 25% higher than the official rates (in Argentina) – the trip had it all.

Being part of these meetings and discussions and interacting with these leaders and managers (many of whom were Kellogg alumni) really makes one appreciate the sheer scale of our world, the incredible diversity and how value is being created and captured in every part of it. 

(Most items over ~ USD 100 in Brazil can be bought with monthly payments to enable the growing (lower) middle class to buy aspirational goods; Picture above shows monthly payments in the left hand column and
the one-time purchase price in the right hand column)

(Seat-back advertisements in TAM – not widely adopted in the US yet; good advertising strategy – brings in revenue for airlines and presumably increases brand “stickiness” with a captive passenger audience) 

The second dimension was the local culture (to the extent we could imbibe of it, in two weeks).

Interactions with locals in convenience stores (some of which were open “25 Hours” a day, not 24), shops, buses, subway systems (that some of the more adventurous in our group tried) and restaurants

(Pizza at one of Buenos Aires’ most famous pizzerias)

gave us a taste of local culture and human behavior in those parts of the world (superficially different from the US of course but not that different at a more fundamental, deeper level). The waiter in the restaurant in Rio that wouldn’t stop smiling when we told him he reminded us of Tommy Lee Jones

or the owner of an amazing Italian place in Sao Paulo who told us (and showed us) with great pride how their delicious pasta was made upstairs every single day and how he wanted to expand or how one of our friends made our tour guide’s day by buying her souvenirs – each interaction enriched our trip and our experience in different ways.

The third dimension was of course relationship building and bonding.

Most of the people on the trip hadn’t spent a lot of time together, other than during classes or the occasional Saturday or weeknight dinner. To be with each other from 8 or 9 in the morning until 2 or 3 at night every night, partaking of local culture, experiences and meals – which included empanada making,

(Empanada making in Buenos Aires, at The Argentine Experience)

Malbec sampling, horseback polo learning and “playing”,

(Polo experience in Buenos Aires)

hiking, walking the streets of Buenos Aires at 2.30am, eating a cheese sandwich purchased at a gas station(!), getting used to “agua con gas ou sim gas” everywhere, shopping for local tropical fruit in Sao Paulo,

(A cousin of the so-called Custard Apple, one of the few fruits I cannot stand;
seen here at a local market in Sao Paulo)

eating Falafel in Sao Paulo, taking in Rio’s spectacular views from Sugarloaf mountain together, watching a very good Tango show in Buenos Aires – allowed us to deepen existing friendships and relationships while helping us form brand new ones (discovering, for example that still waters in quiet people do indeed run quite deep…) that will remain with us for a very, very long time…perhaps through this lifetime. 

Which is probably how many of us will remember the trip – a “once in a lifetime” experience.