Watch stocks you care about
The single, easiest way to keep track of all the stocks that matter...
Your own personalized stock watchlist!
It's a 100% FREE Motley Fool service...
Remember about 10 years ago, when everyone was talking about the "paperless office"? The idea was that offices wouldn't need to use paper, now that all companies were using the Internet and email. Finally, we would be able to stop killing so many trees and wasting natural resources.
How's that working out?
Today, the refrain is somewhat different, but I expect a similar result. The proliferation of e-readers and their more accomplished big brother, the tablet, will supposedly make physical books disappear. Some have written that physical newspapers and magazines will vanish within the decade.
The e-reader business has generated a lot of positive buzz for a struggling publishing industry, and it's even helped a company near its deathbed show some signs of life. However, I don't believe the physical book is going away. And for Barnes & Noble's (NYSE: BKS ) Nook and every other e-reader not made by Amazon.com (Nasdaq: AMZN ) , all I see is a dead end.
Welcome to Apple's world
To be fair, Barnes & Noble's new NOOKcolor e-reader has been well-received and highly regarded. But there's a big gap between an e-reader like Amazon's Kindle and a tablet like Apple's (Nasdaq: AAPL ) iPad. Products that fall in between enter some very unfavorable territory.
Barnes & Noble's new NOOKcolor has stumbled into that no-man's-land, between the pure e-ink experience of the Kindle and the multimedia power of the iPad. Sure, at $249, the NOOKcolor costs about half as much as the entry-level iPad. But consumers looking only for an e-reader can buy a Kindle for $139.
The NOOKcolor combines the worst attributes of these competitors' products. It's not as easy to read as the Kindle or other e-ink readers, and it doesn't come close to the functionality, or even the battery life, of an iPad. Do you think any Barnes & Noble product will be able to compete at that next level with Apple? I sure don't.
Steve Jobs doesn't, either. During Apple's most recent conference call, he called the imminent arrival of middle-of-nowhere seven-inch screen tablets "dead on arrival." The Apple CEO was most likely talking about upcoming tablet releases by closer rivals such as Research In Motion (Nasdaq: RIMM ) and Hewlett-Packard (NYSE: HPQ ) , and the substantial number of tablets that will use Google's (Nasdaq: GOOG ) Android based operating system. However, the seven-inch NOOKcolor fits nicely into this category as well.
More disturbing is the increasing competition and industry fragmentation on the horizon. It's expected that at least 50 new tablet devices will debut at the Consumer Electronics Show in 2011, as well as new products from other manufacturers of dedicated e-readers, such as Sony (NYSE: SNE ) . The long-awaited launch of Google's new online book retailing site, Google Editions, should only increase this market fragmentation. The new site will let consumers download books directly from Google's site on just about any device. This universal format should be a positive, since it offers consumers more purchasing options, rather than being locked into a dedicated e-reader or tablet.
Long road to nowhere
I could get more excited about the NOOKcolor if the Barnes & Noble business model were still viable. But the company is not an e-reader or tablet maker: It's a brick-and-mortar retailer on its last legs. Just as the "paperless office" never materialized, I don't believe the bookless world will, either. But that doesn't mean there will still be a need for large brick-and-mortar retailers like Barnes & Noble and Borders (NYSE: BGP ) .
Of course, Amazon isn't naturally a device maker, either -- but it is an innovative and rapidly growing business that will most certainly play an extremely important role in the growth of e-commerce and technology delivery over the next decade. Unfortunately, I can't say the same for Barnes & Noble.