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Kobo CEO Says Not Selling Washing Machines Key To Overtaking Amazon
DavidGilbert99 writes "Kobo, the Canadian-based ebook company is number two in the market, behind the behemoth that is Amazon. So what does the CEO Michael Serbinis think is the one thing which will allow them to overtake the e-commerce giant? 'We don't sell any washing machines, we don't sell radios. We are not focused on the next server farm to offer data services. It is a question of focus.' Serbinis goes on to tell IBTimes UK: 'From an organization standpoint at Kobo, this is all we do. Everyone at Kobo, all we focus on is creating a great experience for book-lovers.'"
Ah but focusing *can* lead to superior results.
A lot of Amazon ebooks that are OCR scans (rather than directly made from author's digital source) are complete junk full of errors. (example: 48 Laws of Power by Robert Greene) Now if their "focus" involves having human readers who *like* reading books as a hobby go through the scan and correct OCR errors by referencing the printed book, then yes I would say their focus can make them the best.
Yeah, claiming that focusing on one thing means you somehow have an advantage at *selling* that thing (vs. providing the "best" product regardless of sales) is pure CEO babble.
Case in point - Walmart. They don't really do anything well except being price competitive and stocking about a quarter million SKUs in one store. Compare to local businesses that usually have great service and do one thing really well. And we all know how that's turning out...
Last I heard, AWS was Amazons largest source of profits now, having pulled ahead of the entire retail business.
It looks like Amazon is a "cloud vendor" now, with a retail business to fall back on if the cloud doesn't work out.
Socialism: a lie told by totalitarians and believed by fools.
Except you can now compare Kobo not with Amazon, but the e-book department of Amazon.
I didn't really buy into the CEO's comments because I believe Amazon would have had an e-book team larger than their entire company. But I didn't think his conclusions must be wrong, because indeed the Amazon would adjust its e-book related operations to serve the enterprise's other interests.
Now that I know Rakuten owns it, it's a different story.
Yes. I just downloaded a Kobe book - so far, half way into it, I'm finding it a much better experience. Every. Single.Amazon.Book. that I've purchased has numerous, obvious typos. Every single Amazon book that I've purchased has crap for illustrations. They're horribly compressed like they were planning on sending them through a 300 baud modem. Trying to read a history book with crap for maps is unpleasant and unnecessary.
The illustrations in the Kobe book are pleasant, readable, zoomable. The reader is even nicer. Color me impressed so far.
Faster! Faster! Faster would be better!
You heard wrong. The estimate is that it will account for about 20% of Amazon's profit in 2013. It is growing faster than the rest of their business, though.
Except that's just not how the market work. Focusing might sound good on the surface, but in reality it's not going to be the most successful. It might even be better for the customers that it has, but it's not going to make more money. First off, if you can buy everything from one place then you are used to and comfortable with buying stuff from that place, so a vast majority of people will buy stuff from that store. Who do you think sells more dog food in America, Petco or WalMart? Secondly, if you're a company with more revenue streams, you have more resources to develop new products, and you have more resources to hold yourself up between the time you release those products and the time you actually start making a profit off of them.
You can argue that Kobo's focusing could lead to better results in terms of user experience, but they aren't going to beat Amazon in terms of market share unless they really come up with something consumers think is unique and amazing.
I'm just going to point out a few minor flaws in your argument. In Petco vs Walmart example, WalMart is still only in one industry, retail. This is considered relatively focused as far as the market is concerned. The issue with Amazon is that they've actually diversified outside of retailing such as Video Streaming, Cloud Vending, Logistics (third party sellers and Amazon then distributes), and other smaller segments. So Amazon is not focused. But on the other hand, Kobo is too focused. They only do one thing. But I totally agree with you that they need something amazing to beat Amazon since Amazon has such a head start on Kobo in the market.
So I guess what I'm trying to say is that there is a spectrum of focus. 1. Ultra-focused: Petco and Kobo, 2. Focused: Walmart, 3. Not Focused: Amazon, 4. Conglomerates: 3M, Time Warner.
Corporate Finance basically tells that Ultra-focused companies usually end up in niche positions. Companies like Walmart generally do very well. Amazon will still do OK, because their "diversified" businesses come from core capabilities required to succeed at their core business, ie logistics and excess server power. And then conglomerates generally trade at a discount in the stock market because generally the disadvantages of diversification outweighs the advantages, and individual investors can diversify themselves as opposed to having to invest in diversified companies.
That being said, I don't think Kobo will be able to beat Amazon anytime soon. After all there aren't that many David vs Goliath stories unless there is mismanagement or the "Goliath" is resting on its laurels.
local businesses that usually have great service and do one thing really well. And we all know how that's turning out...
What great service, and what one thing do they do really well? I've never been impressed with the service obtained at the sort of store that Wal-Mart has killed. Wal-Mart is open 24/7 at nearly all locations. In big cities this isn't necessarily a huge triumph, but - actual example from ca. 2008 - your iPod adapter dies at 8 AM on Sunday, in the rural South, just after the start of a twelve-hour road trip. If you're lucky, there will be a Radio Shack down the road that will open around noon. Wal-Mart? They're open, the nearest one is visible from the highway, and it's only 20 miles down the road, because they put stores in towns of 5000 people. You go inside, get your adapter for far less than the Radio Shack rape price, and maybe even pick up some snacks for the road while you're in there. I don't buy my steak at Wal-Mart... but commodity stuff? Absolutely.
"The issue with Amazon is that they've actually diversified outside of retailing such as Video Streaming, Cloud Vending, Logistics (third party sellers and Amazon then distributes), and other smaller segments. So Amazon is not focused"
On the other hand, you could say that Amazon has simply turned those things into commodities, in which case they are still very much focused on retail.
When Amazon started out, big-box stores became a showroom: people would look at that new TV, and go buy it on Amazon.
Now, I go to Amazon to check reviews, but do most of my shopping on specialized vendors like Newegg or B&H Photo & Video. The specialized stores tend to have slightly better prices, or better selections, or better recommendations. Amazon is now my showroom for the rest of the Internet.
I tend to aim for the one star reviews and see what the major gripes are. So long as it is a major gripe that I don't anticipate running into, or at least I think that for the price it's worth the risk, then I'll go ahead and buy it.
For example I bought a cable recently, which had two single star reviews. Both were complaining that the cable was too short. The description said 4 feet. 4 feet is exactly what I wanted, so I bought it, and what do you know, I got a 4 foot cable.
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