Is Borders 'ahead of the curve' on electronic books?
Ann Arbor-based Borders Group Inc. is aiming to secure 17 percent of the electronic books market by next summer -- an ambitious target for the struggling chain.
But one expert told the Detroit News that Borders is "ahead of the curve" on the nascent e-books industry.
"Borders is positioning itself to be an important e-bookstore
location," Albert Greco, a marketing professor at Fordham
University's Graduate School of Business in New York, told the News.
Borders plans to sell up to 10 e-readers in its stores, including this device from Kobo Inc.
Photo courtesy of Borders
Borders is hoping that its new eBook store, developed by
Toronto-based Kobo Inc., gives it a competitive edge in digital book
sales.
Central to Borders' strategy is an assumption that readers will favor e-book applications that allow users to access their books on a variety of devices.
So, for example, if you buy a book through Borders' eBook store, you'll be able to read it on Apple's iPad and iPhone in addition to a variety of other devices. Techies call this strategy "device neutral."
That is, Borders is refusing to place a bet on a specific e-reader's prospects for becoming the dominant device in the industry.
"At the end of the day, we're not a device manufacturer," Borders chief information officer Scott Laverty told the Detroit News. "We can be very, very flexible."
It's an important recognition for cash-strapped Borders, which doesn't have the resources to develop its own e-reader from scratch. (The company instead plans to sell up to 10 e-readers in its stores, including the Kobo eReader, which is already available at some locations and online.)
Still, Borders faces enormous challenges that threaten to overshadow its digital strategy -- namely, can the company survive as an independent retailer? And what does that mean for the 650 employees remaining at the company's headquarters in Ann Arbor?
Digital books are important to Borders' future, but for now they make up just a sliver of its revenue.
Although the company has improved its balance sheet by selling its Paperchase unit and aggressively cutting costs, its long-term prospects as an independent retailer are still in question. With more than 500 super stores, Borders is faced with a massive real estate footprint that remains prohibitively expensive.
And the company can't escape the realities in the marketplace: Amazon, Walmart and Target can't be beat on price.
Investors are still waiting to hear whether Borders Group's new
chairman and CEO, Bennett LeBow, has a defined vision for the company's
future.
LeBow has yet to speak to the media but is widely known as an activist investor and is positioning himself to gain greater control of the company.
Ultimately, LeBow's agenda probably means more for Borders' future than the e-books strategy.
Comments
Rasputin
Fri, Jul 16, 2010 : 2:51 p.m.
Unfortunately, Borders has always been towards the back end of the pack when it comes to all thing electronic. When I worked for them back in the mid-90s, they made this brilliant move and shut down their online music store which was basically a precursor to iTunes (and ahead of its time). Now, that Kindle and iPads dominate the market, they decide to join the market segment with an anachronistic kindle wanna-be?! The only area that Border's has ever had an advantage and opportunity to compete is their existing supplier and publishing channels. In other words, access to to content, but how to get it to the marketplace will be their ultimate downfall. Good luck.
UofM_Fan
Fri, Jul 16, 2010 : 4:34 a.m.
"ahead of the curve"? You have got to be kidding me. Yet again, Borders is trying to catch up with everyone else. They have no inovation, and with only ~600 people trying to run things at the HQ they can't possibly inovate.
Brian Bundesen
Wed, Jul 14, 2010 : 4:14 p.m.
The 'ahead of the curve' assessment is tough to swallow. Unfortunately, Borders was and is third in a three horse race. Also, as the article said, the eReader segment is but a small sliver of their overall revenue. I sincerely hope this is a success, and hope that Mr. LeBow knows something that we don't know.
timeatwork
Wed, Jul 14, 2010 : 1:42 p.m.
i forsee all the boarders book stores closing. They will then open boarders cafe/ebook store. you'll be able to go in, buy a fancy new ereader, and return to buy coffee and use their wifi to buy books from them. they'll cease to sell paper books within two years.
snark12
Wed, Jul 14, 2010 : 12:50 p.m.
I have no complaints against Nathan, but Amazon launched Kindle in 2007, and B&N launched the Nook ten months ago. You can read Kindle and B&N ebooks on PCs, Macs, Blackberries, iPhones, iPads, Android, etc., as well as their respective and market-leading dedicated readers, the Kindle and Nook, respectively. And Apple launched its iBooks store for iPad and iPhone a few months ago. How exactly is Borders "ahead of the curve"? Seems like they're "playing catch up." Yes, they support a number of dedicated ereaders that the market has decided are also-rans but that's more of a surrender to the market leaders than a strategy.
Nathan Bomey
Wed, Jul 14, 2010 : 12:13 p.m.
@Geek Chick, thanks for the comment. As you'll note, I'm not arguing that Borders' e-books strategy is right or wrong. The expert quoted by the Detroit News said Border is "ahead of the curve." That's his opinion. My goal was to place this claim in context. That is, whether Borders' e-books strategy is on target may be pointless if the company can't reverse its in-store revenue decline.
Geek Chick
Wed, Jul 14, 2010 : 11:44 a.m.
You've got to be joking! Your reporter and your industry "expert" know nothing about the history of Borders. Borders was gung-ho on e-books about 10 years ago. But the format and e-readers weren't popular with customers. And no, Borders didn't lead the industry back to the digital format. Amazon won that race with the Kindle. Nathan - you are not employed by Borders to do public relations spin. Your customers are your readers, and we expect better from you!
cibachrome
Wed, Jul 14, 2010 : 10:36 a.m.
Borderline.