I suspect most readers are too young to remember the heady days of tobacco company commercials, especially radio commercials, or even the cigarette brand Philip Morris. It’s print (1940s) and early TV commercials featured a hotel bellhop carrying a tray with a pack of Philip Morris cigarettes on it and bellowing “Call for Philip Morris!” The radio version (also 1940s), popularly heard on programs like The Jack Benny Show, really was well done.

The commercial came to mind as I digested the recent news about Borders Group’s continuing quarterly losses. It was only a week or two ago that Borders wanted to buy Barnes & Noble. But now — if Leonard Riggio is doing any real thinking about the future — might be the opportune time for B&N to buy Borders.

OK, I hear the naysayers screaming that the last thing that B&N needs is Borders’ bricks-and-mortar stores. True, but that is narrow thinking. By buying Borders, which should be available for almost nothing, B&N can accomplish some important things, such as the following:

  • First, it can immediately close all the b&m stores that currently compete with its own brand. This would increase traffic to its own brand for those of us who like to shop at real bookstores rather than virtual bookstores. And it could convert Borders members to B&N members; there is a lot to be said for loyalty programs.
  • Second, it can replace Borders as a partner in Kobo. This strikes me as a good move for B&N because it would rapidly expand B&N’s ebook reach.
  • Third, B&N could become the partner with ebookstores like the Sony ebookstore, which is currently partnered with Borders. Where else could Sony turn? Perhaps to Kobo but if B&N was a significant partner in Kobo, it would still benefit. If you start adding Sony’s and other “independent” ebookstores that are really run by Borders, B&N could suddenly see a significant rise in its share of the ebook marketplace.
  • Fourth, by replacing Borders as a partner with these other “independent’ ebookstores, B&N would be in a position to incentivize these independents to upgrade to the B&N DRM version of ePub, which would expand its marketplace. (Yes, I know it is relatively easy to strip the B&N DRM, but most people don’t/won’t/can’t do it.)
  • Fifth, it would give B&N a further leg up against both the Amazon and Google juggernauts, something it is going to desperately need it the not-too-distant future.
  • Sixth, if B&N were smart, it could cut a deal with Sony to offer the Sony readers as premium readers — for those people who are willing to pay more for higher quality — and have Sony include perks, perhaps such as wireless access to the Sony, Kobo, and B&N ebookstores, that are not currently available on other devices. This would be a boost to both B&N and to Sony.

Unfortunately, no deal involving Borders is a problem-free deal. There are the debt problems and leases, but the easy way out would be to run Borders through bankruptcy. Inventory debt could be reduced by returning all of Borders’ inventory.

The real issue, I think, is who will be faster on its feet — Google or B&N. An unknown possible player would be Kobo or some of its partners like Chapters, but I don’t see any advantage to them in taking over Borders.

I suppose that someone could pump more capital into Borders but its management team certainly inspires no confidence. Consequently, I think that is a long shot. B&N should strike while Borders is crippled. The question is: Will B&N hear the call?

Via Rich Adin’s An American Editor blog


  1. Why would anybody buy Borders when they can just wait for it to go bust and claim their piece of the carcass? Is there any evidence that the Borders ebookstore has even, say, 2% of the market? Who are these “independent’ ebookstores and do they amount to anything?

    The only call I’m hearing is the life support being switched off. Borders died a long time ago and it would be a mercy to just pull the plug. Nobody buys a corpse least of all companies like Google or B&N.

    Do like your tenacity in trying to save Sony though!

  2. I suspect that adding Borders’ troubles to B&N’s troubles would increase rather than decrease system disorder. B&N is getting things right. Their Nook Color is a nice machine. I visited a B&N the other day and enjoyed the experience–lots of high-margin gifts, friendly staff, and, of course, books.

    Seeing the Sony as the ‘premium’ device reflects, I think, your tastes rather than a universal feeling. Sony’s reluctance to add wireless capabilities to all of their machines seems more like blindness to me than genius although I know you disagree on this one.

    Anyway, I’d love to see a healthy eco-system of book distributors. I just don’t think that a BN/Borders linkup offers a path toward that goal I know we share.

    Rob Preece

  3. B&N buying Borders is a waste of limited resources that are better used building up the Nook business instead of salvaging junk from a sinking ship.
    Nothing would please Amazon more than B&N taking on that hopeless task.

  4. I usually find Rich’s posts thoughtful and interesting. This one, tho, left me wondering what psychotropic he’s been experimenting with. 🙂 Borders has NO assets worth the distraction and expense of acquiring. Still, it wouldn’t surprise me to see B&N or some other desperate corporation jump on it, wishfully persuading themselves such a bold move will pump up their stock values somehow. Not bloody likely. The standalone bookstore chains are a doomed business – they simply can’t offer enough value to the consumer anymore, given the cheaper and more convenient alternatives for book buying.

    Bill Defelis
    author, “Hazel Wetherby & The Elixir of Love”

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