Thursday, July 11, 2013

Steve Ballmer & Leonard Riggio announces BKS & MSFT merger at Worldwide Partners Conference ... not

MS DOS V.5, I think I've mastered it, time to recycle ...Well, at least I don't think Steve is going to be making the announcement that Microsoft will be merging with troubled bookseller Barnes & Nobel. Yes, it's true that the mercurial Ballmer will be addressing the MSFT Worldwide Partners Conference later today (July 11, 2013), but the odds are that the big announcement will be that MSFT is burying its Online Services Division deeper in the corporate structure to hide the fact that Bing, MSN and the other MSFT forays into online have bled the company of nearly 11 billion (with a b) dollars over the past eight years.

Why bookstores are relevant, Nikki Sixx signings At the same time, the past few days have seen some major shakeups at Barnes & Noble. B&N announced that CEO William Lynch was out:
"Another dreary chapter for Barnes & Noble came to a close today with the resignation of chief executive William Lynch, the man brought on board to build the company’s tablet business". (Forbes, July 8, 2013)
The "dreary chapter" for the bookseller has been a long one and one that seems to have no end in sight. To tie these tales together, let's look back at the reports/rumor from earlier this year (May) that MSFT was buying B&N's Nook Media wing (a good summary here) having already invested $180 million in Nook. Would/should/could MSFT buy Nook? Who knows ...

2012.02.26-IMG_0892 Last fall, in talking to a Wall Street colleague, I floated my theory that MSFT should out and out buy B&N, Nook, brick & mortar. The whole she-bang. Or, if not that, deeply partner with B&N founder and chairman Leonard Riggio in a tight partnership. My colleague brushed off the idea saying "the Street would kill MSFT if it went that way." Probably true and probably also why what's good for "The Street" may not be best for business writ large (just look how "The Street" reacted to MSFT's, IMHO wrongheaded, plan to put MSFT "boutiques" in Best Buy big boxes -- which reminds me, what happened to the Microsoft Stores?).

So, here's my alternative history version of what should happen tomorrow. Ballmer and Riggio get up on the stage and announce that MSFT and BKS are merging and that henceforward, the brick & mortar B&N stores will be called "MB&N" (or something much better that a seven-figure marketing firm will come up with).

Barnes and NobleSo, why you ask? Short answer: "Apple Stores".  MSFT needs a place to showcase it products (with service people who, unlike my Verizon Store guy, are at least paid to fake liking a product). Like, say, the way Apple does. Putting aside the current profitability (or lack of) of Apple Stores, MSFT has nothing to lose in this arena. Anecdote: I was looking at new phones the other day, I went to the Verizon Store where I was shown iPhones, a host of Android devices. I asked to see a Windows phone and was told, "sure, they have them, but let's look at a Samsung". No, I really want to see a Windows phone, tell me about them. Well, turns out that the staff doesn't use Windows phones, doesn't even play with them. "Let's go back and look at the Galaxy." That's the kind of show-rooming that will keep the MSFT phone in low single digits -- if they're lucky.

What hardware is MSFT doing well at these days? How about the XBox. Wouldn't it be neat to try out an XBook in a comfortable, high traffic, non-"Big Box" spot, say, a bookstore? Say, a Barnes & Noble? Say a MB&N? How about MSFT take Nook (great name, marketable brand) off the forked Android platform and move it to the Windows OS? Kill the Surface and sell the new Nook (Windows OS edition) with the beefed up specs MSFT could offer plus the rich B&N content ecosystem. Offer publishers a third space (outside of Amazon and Apple) and consumers a viable hardware/software/content ecosystem not dependent on that same duopoly.

So, in summary:

  • Windows phones are tanking
  • Surface tablets can't gain market share against cheap Android or expensive iOS devices
  • People love Xbox
  • Barnes and Noble is in deep doo doo on so many fronts
  • MSFT needs viable online content
  • People love to play with technology; and if they can do it in a fun place (not Best Buy) they might buy something after they stay there a while
  • B&N has nothing to lose; MSFT has poured so much money down so many rabbit holes trying to compete with __________ (fill in the blank with Apple, Google, etc.) why not invest in a little real estate (in the form of B&N brick and mortar stores)?
Sadly, B&N (which I will sorely sorely miss) may not have a chance to survive. MSFT is going to be with us for a while (even if their consumer products wither and die), but why not take a chance on a bold move? Maybe a bold move like that wouldn't scare The Street, but do Ballmer and Riggio have the guts to make a big bet? 

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