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The Roundup July 22

B&N's Plastic Logic reader versus Kindle
Kindle (on the left) and B&N’s Plastic Logic ebook reader (right). An ebook reader you can actually READ? Who’d've thunk?

The Kindle killer cometh.

Barnes & Noble said that it will offer more than 700,000 titles, including more than 500,000 public domain books from Google Inc., and that it expects to be able to offer more than one million titles within a year.

Book formats supported by the new Barnes & Noble e-bookstore include those that can be viewed on Apple Inc.’s iPhone and iPod Touch, BlackBerry smartphones and most Windows and Mac computers. But William J. Lynch, president of Barnes & Noble’s BN.com, said that titles bought through Barnes & Noble’s e-bookstore won’t be compatible with Sony’s Reader or Amazon.com’s Kindle e-book reader, the two dominant e-readers in the U.S. market. . . .

“The biggest news here is the multi-channel integration of [Barnes& Noble's] physical store and e-book store via the iPhone ,” said Sarah Rotman Epps, an analyst with Forrester Research Inc. “It makes use of B&N’s biggest asset: the brick-and-mortar store.”

(“Barnes & Noble Challenges Amazon’s Kindle,” Wall Street Journal, July 21) Great news for content providers, particularly as Jeff Bezos really had his sights set on the Evil Empire thing. B&N follows a play right out of the IBM PC playbook: don’t screw around creating everything from scratch. Take what’s best out there and be the one that puts it all together. Expect B&N to beat the Kindle reader’s price point by a substantial margin (at least $100) and offer better deals to content providers. One of the many flubs that Amazon has made was trying to rip off content providers in the hopes that they would be the only game in town (Amazon, for instance, demanded 70% of the revenue for all newspapers provided on the Kindle). Amazon’s greed may make it a distant second or third in the electronic reader market. All B&N has to do is put greed on hold and make it extraordinarily lucrative for content providers to place their titles in the B&N store as opposed to Kindle. When they hit the one million mark — with Amazon lagging behind — then they win. And, if they want to really win, give the reader away. Seriously.


Got a product you want to get in retail stores? Let Babies’R'Us be a bit of a warning.

From 2001 to 2006, Babies “R” Us told companies like Medela that they had to enforce resale-price maintenance — i.e., tell the Web retailers, who can more easily discount products since they avoid brick-and-mortar costs, to sell your products at X, or you’ll cut off the supply. If they resisted, Babies “R” Us threatened to cut off the manufacturers, according to the suit, and refuse to sell their products in Babies “R” Us stores. Since Babies “R” Us sold 30% to 50% of these companies’ products, Medela, which is based in Switzerland, and other brands like BabyBjörn, the Swedish strapmaker, and Maclaren, the strollermaker based in the U.K., had no real choice but to go along. . . .

In spring 2002, Babies “R” Us was unhappy that Internet retailers were discounting Medela breast pumps. So “to send a message,” according to the opinion, Babies “R” Us canceled all Medela orders on May 2, 2002. Backed into a corner, Medela terminated 17 Internet accounts two months later. The reason, according to an internal Medela document: “We discontinued Internet sellers to protect BRU’s business and margin, and therefore accepted considerable legal risk.”. . .

. . . in the class-certification hearing, an economist provided a regression analysis showing that the overall sales of the manufacturers actually decreased because of the agreements. Britax, for example, admitted that sales fell 5% in the two months after Internet discounting was prohibited

(“Did Babies “R” Us Gouge Mommy and Daddy?,” Time, July 21) Naturally, the write-up in Time stresses how Babies’R'Us screwed consumers, since the vast majority of their readers come at the news from this perspective. If you’re an entrepreneur or small business, however, the story is doubly relevant. Scoring a large retailer can make or break your fledgling manufacturing business. But large retailers play hard and play for keeps. And they don’t care about you, as the Brita loss of sales demonstrates eloquently. I have worked for many clients preparing presentations to folks like Wal*Mart or Target. Few of them fully appreciate the nature of the relationship they’re starting.


If you’re one of the ten people out there using Yahoo! Small Business, then your online home is about to change hands.

. . . as part of Bartz’s drive to dismantle non-core assets, Yahoo is also trying to shed both HotJobs, which Yahoo acquired for $436 million in cash and stock back in 2001, and Yahoo Small Business, which helps customers get their small businesses online by providing them with everything from domain registration to site monitoring to promotional tools.

“They’ve been approached by [major buyout firms] but they’re proactively looking to sell to a strategic investor like a Careerbuilder or Monster.com,” says one source familiar with the situation, adding that the company may be looking to avoid a future embarrassment. “If a Warburg [Pincus] or a Spectrum [Equity Investors] buys HotJobs for $300 million and resells it for $500 million in two years, that’s going to look pretty bad [for Yahoo],” says this person.

Strategy aside, Yahoo — which is attempting to sell the properties without the help of an investment bank – could use a financial boost. Newly released second-quarter earnings show Yahoo’s total revenues dropped 13 percent to $1.5 billion, despite an 8 percent rise in net income to $141 million.

(“Yahoo Trying to Sell HotJobs, Yahoo Small Business,” peHUB, July 21) Let’s start with Hot Jobs. It’s hard to make money on a job classifieds site when no one’s hiring. Why Yahoo! seriously believes that someone like Monster would purchase Hot Jobs, I just don’t know. Yahoo! Small Business is primarily a Web hosting service for small businesses. We evaluated it for our book, but decided not to include it because of pricing, storage limitations, and customer service. They have since then become an amazingly competitive service, rivaling the best deals out there in the cutthroat marketplace of Web hosting. But, again, the competition is mighty fierce and the margins are creeping downwards one penny at a time. As a Web hosting service, it’s worth doesn’t exceed its current clients and its equipment value. But Yahoo! Small Business does have the incredibly valuable virtue of the brand name and the Yahoo! pages which drive potential customers to the service. Yahoo! could do well if both those go with the sale, in much the same way IBM allowed Lenovo to continue to use the IBM brand for two years after selling its PC division to the Chinese company.


To the ranks of the jobless we now add a Masters in Business Ethics. Listen, if your goal is unemployment, get the Masters in Theater Arts and at least havea good time for two years.

The New England College of Business and Finance is hoping to carve out a new niche by offering a master’s degree in business ethics and compliance. The Boston school, which caters mainly to about 650 adults doing online course work, says the degree is a first, and was conceived partly in response to the rash of financial world scandals in recent years.

(“Boston business school offers master’s in ethics,” Boston Globe, July 22) Don’t get me wrong. I’m all for ethics. In fact, I’m currently writing a book on business ethics. But, really, folks, if you have managed to reach an age where you’re admissable to a master’s program and you still need to learn right from wrong, then give up. You can’t learn character in graduate school — you develop it in your youth. Without it, all the ethics courses and degrees in the world will be water off a duck’s back.

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