Is Barnes & Noble's Fear Of iPad Competition Stunting Its M-Commerce Effort?

Mobile Commerce is just beginning to demonstrate how tricky it can get. On Tuesday (August 17) Barnes & Noble announced new versions of its free e-reader app for the iPhone and iPad. The app has most of the features of Barnes & Noble's Nook tablet e-reader. But one feature is notably absent: the Nook's ability to let users read anything in Barnes & Noble's electronic inventory when the device is inside one of the book chain's 723 stores.

That Nook feature, which Barnes & Noble calls "Read in Store," doesn't just allow customers to browse whatever they want in the store. It also allows the retailer to track each customer's browsing habits to the second -- and to the page. That's a potential gold mine of data for feeding recommendations to customers as well as managing dead-tree inventory. And because "Read in Store" has turned out to be very popular with Nook-using customers, Barnes & Noble knows there's a demand for the feature--and a lot of customer data to be acquired from it.

But the bookseller is forgoing all that data by keeping "Read in Store" out of the new iPhone and iPad Nook app. Barnes & Noble is also losing out on one of the most compelling and unique features of its M-Commerce offering, something Amazon can't touch because it has no brick-and-mortar bookstores. "Read in Store" is a natural for driving traffic into stores. Why is the chain is giving up those advantages?

It's almost as if Barnes & Noble is treating the Nook device as the world's most expensive loyalty card. Customers' own mobile devices will let them into the M-Commerce store to buy books, but only the loyalty-program members--the Nook owners--get the extra benefit of being able to read any e-book free for an hour a day when they're physically in a store.

However, there are more likely reasons for the bookseller's reticence. The most probable: Barnes & Noble is queasy about the fact that Apple now sells e-books on the iPad. Maybe the chain is afraid iPad users will sit in its stores, browse its books and then buy from Apple. That's a perpetual problem for E-tailers, and a mindset that's toughest for traditional retailers to shake.

But that's the worst reason imaginable for limiting what the iPad can do with the Nook app. The numbers are simple: By now, Apple has sold at least 4 million iPads, compared with 600,000 Nooks. The iPad is a Nook competitor; it's also a far larger sales channel than the Nook.

Or maybe Barnes & Noble--which we all would assume is strictly in the book business--is now taking itself seriously as a company that sells electronic hardware. Every store in the chain is currently carving out a 1,000-square-foot "Nook Boutique" to push the e-reader. By limiting what iPad users can do with the Nook app Barnes and Noble may be trying to lure them to the Nook device. But that's no way to compete with gadget champion Apple.

Another possibility: It could be something as simple as Wi-Fi capacity. Barnes & Noble may merely be afraid that a big influx of iPad-toting customers will overwhelm the wireless networks in its stores.

Whatever the reason, the reality for Barnes & Noble comes down to this: The Nook device makes up a tiny slice of the e-reader pie. If sales of physical books drop fast, bookselling will quickly become all about M-Commerce.

Limiting that channel is a losing proposition, especially if it means doing without tons of useful customer data. For Barnes & Noble, M-Commerce isn't an option, it's a necessity--even if that means getting uncomfortably close to a competitor.

M-Commerce puts competitors in bed together, much more so than E-Commerce does. The iPad is a huge potential sales channel for Barnes & Noble's e-book business. But the iPad is also an e-book-selling competitor--in the form of Apple's iBook app--in addition to being a competitor to the Nook hardware. Apparently, Barnes & Noble knows it needs iPad-the-sales-channel but can't yet bring itself to fully support iPad-the-competitor--even though that support could bring in huge amounts of data on each customer's book-shopping habits.

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