From The New York Times:
Even for a company with a lot of bad news lately, the bulletin from Barnes & Noble this month had an ominous feel.
Barnes & Noble, the nation’s largest book chain, warned that when it reports fiscal 2013 third-quarter results on Thursday, losses in its Nook Media division — which includes sales of e-books and devices — will be greater than the year before and that the unit’s revenue for all of fiscal 2013 would be far below projections it gave of $3 billion.
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A person familiar with Barnes & Nobles’s strategy acknowledged that this quarter, which includes holiday sales, has caused executives to realize the company must move away from its program to engineer and build its own devices and focus more on licensing its content to other device makers.
“They are not completely getting out of the hardware business, but they are going to lean a lot more on the comprehensive digital catalog of content,” said this person, who asked not to be identified discussing corporate strategy.
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But while tablet sales exploded over the Christmas season, Barnes & Noble was not a beneficiary. Buyers preferred Apple devices by a long mile but then went on to buy Samsung, Amazon and Google products before those of Barnes & Noble, according to market analysis by Forrester Research.
“In many ways it is a great product,” Sarah Rotman Epps, a senior analyst at Forrester, said of the Nook tablet. “It was a failure of brand, not product.
“The Barnes & Noble brand is just very small,” she added. “It has done a great job at engaging its existing customers but failed to expand their footprint beyond that.”
Link to the rest at The New York Times
PG says this is a big retreat. The benefits of customer lock-in on a dedicated e-reader or quasi-customer lock-in on a tablet that pops up the manufacturer’s store when it starts are significant.
Moving from that kind of persistent screen visibility to being just another pre-installed app on someone else’s machine is a big step down.
Additionally, tablet makers are going to take a slice of ebook sales that come through a Barnes & Noble app.