Barnes and Noble got it right with the Nook, converting its brick and mortar stores into a digital eReader.
B&N learned the lesson from record stores like Virgin and Tower that if you’re not building a piece of hardware with an integrated store your business will go extinct.
The same risk was at play for Amazon. Even with a digital store the hardware owners with integrated stores like iPhone and iPad still had the upper hand. The Kindle was therefore a natural succession in the digital service game.
We’re seeing a similar shift in social. People are the equivalent of digital products, bought and sold by advertisers. Facebook is building a phone to maintain its social networking hegemony.
The real service in service companies whether it be Barnes and Noble, Amazon, iTunes, or Facebook is in the piece of owned hardware.