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Is Nook on life support?

25 February 2013

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.

. . . .

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.

. . . .

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.

Nook

31 Comments to “Is Nook on life support?”

  1. “In many ways it is a great product,” Sarah Rotman Epps, a senior analyst at Forrester, said.

    Yeah, not so much. I can’t turn my Nook Color off and must keep it plugged in constantly. Luckily I only use my Fire now.

    (Yes I know she’s specifically referring to the tablet.)

  2. Oy! I knew this would happen, but friends assured me Nook was the better reader so I listened to them instead of my gut.

    I’ve never had any problems with my Nook, but a tablet is more versatile. The Nook can’t compete.

    • I have a first-gen Nook (well my wife does) and a Kindle of the same vintage. The Nook is in my opinion much better as a physical device.

      I doubt I’ll replace either – when the Nook goes, she’ll get a tablet, and I hardly use my Kindle since I got my iPad. There is something to be said for eInk but I am drowning in gadgets.

  3. I was looking into buying another, newer nook, mine, which I love, is on it’s last legs. When I went to read the comments other customers made about the various nook products I noticed something alarming. Comment after comment discussed problems with the customer service. A similar issue with the product was repeated over and over along with the statements by the reviews that many of them were told by the B&N customer service people that it was THEIR fault and not a fault of the product therefor the person was out X amount of money.

    By contrast looking over reviews for the kindle products I discovered several times, an amazon rep would comment with an update on how they’re moving to fix a problem and/or invitation to call a certain number to resolve issues.

    That really speaks volumes to ME. B&N has sucky customer service on top of their other issues (I myself have had to deal with their customer service and my experiences were not exactly good either). I really think they can’t afford that. B&N has been flailing for some time. I don’t think even life support can save it now.

    • A friend was in Korea when her kindle touch bricked up. After talking with customer service, Amazon sent her a new one, to *Korea*, by FedEx, and she had it in her hands less than 24 hours after calling. This level of customer service just blew me away.

      • The benefits of being on amazon.com as opposed to the satellite sites…

        I bought my Kindle via amazon.co.uk. When it died on me Amazon customer service kindly pointed out the thirty day warranty and told me I’d need to buy a new one.

        • A 30 day warranty? Which kindle? I thought all new purchases had a one year limited warranty with the refurbished ones having 90 days. 30 days just sounds so wrong. I’d be calling CS again.

          • According to the am.uk website there is a one year warranty, but customer service are adamant a thirty-day warranty was in place when I bought mine.

            Getting a sensible response out of am.uk is not easy.

            Regardless, I shan’t be buying another. The forums are full of problems with the e-ink screen, which reflect the problems I had. The forums are also full of praise for am.com customer service dishing out replacements. It makes sense to replace a device however long ago it was bought, and keep the customer buying the content from the same retailer.

            Not on amazon.co.uk. The satellite sites as usual get satellite customer service.

    • My experience mirrors what you read.

      The Nook, as a piece of hardware, is a nice device: it had a following amongst gadget nerds who like to do things such as root ereaders & cell phones in order to extend their usability, for being more powerful than the equivalent Kindle.

      Barnes & Noble heard about their tinkerings, & released a software upgrade which made it much harder to root Nooks, thus pissing off a major market for their device. This upgrade came out a week before Xmas 2011, right before I got mine. (Which means I never had a chance to root mine without risking turning it into an expensive brick.) This problem has probably been overcome since then, but this pettiness pissed me off.

      And I had a problem getting my Nook to talk to my wireless router, so I called their tech support one day when I had to the time to chase the problem down. First line support told me to talk to my ISP — despite the fact all of the other wireless devices in my house talked to that wireless router without a problem. I had to insist on talking to a supervisor to get to a second line tech (Supervisor: “I don’t know *why* she didn’t escalate the issue”), who agreed with me that the problem was with the Nook & promised to send the issue to the developers. I never did hear back from those folks…

      B&N did want to make a go of the Nook, didn’t they?

    • B&N customer service people that it was THEIR fault

      This is what happened when I pointed out that their version of Look Inside shows all the invisible, optional hyphenation points in their sample text. (In all cases — I checked against tradpub ebooks, too.) Seems that you have to have a cutt[]ing-edge brow[]ser if you want a sam[]ple that is, y’know, not full of lit[]tle square box[]es at the break[]points of words.

      The B&N people I’ve spoken to at the local place have always been great. The web-based “support”? Can go do anatomically improbable things to themselves with origami cacti.

  4. “they are going to lean a lot more on the comprehensive digital catalog of content”

    Huh? How? They don’t own any of their content.

  5. I really think companies need to be a lot more open and flexible about what devices you can use their apps on, and that it might actually be a better playing field. I own an ipod touch, an ipad, and a mac laptop but I read ebooks on the kindle app. Why? Besides the fact that I’m almost guaranteed to find a book on Amazon, I used Apple’s iBooks once and found I could read the books on mobile devices but NOT on my laptop!! So now I don’t buy from them out of spite, except for the rare occasion when I buy a digital color picture book.

  6. Well, at this point, I’m not sure Barnes and Noble knows what it is going to do. I think they are struggling, and their plan may change from day to day.

    As PG says, stepping down from the Nook is a step back – I’m not convinced they are going to actually do it, based on what an anonymous person said. Not that the anon may not know – but I think I’d take this with a grain of salt.

  7. It has been confirmed that Riggio is going to take the B&N side private leaving Nook media to float publicly. A sort of reverse IPO. A year late but still a good move. And no, Nook is not doomed yet.

  8. This is exactly why I never bought a Nook. B&N has been ailing for quite some time, and I didn’t want to buy a device–and ebooks–that could very likely go extinct. (Not to mention trying to find books on the B&N website.)

  9. I spoke with a voracious reader just last night about her Nook, and her opinion was that she should have bought a Kindle. She proceeded to relate how she got caught in the “credit card to unlock DRAM” trap, and now has dozens of books she can’t open. Her experience with customer (dis)service didn’t help, and because she feared getting charged a second time for purchases, she abandoned the books rather than give her card number again.

    That’s 150 books a year that someone else is selling her: she hasn’t been back to B&N since.

    I refused to buy a Nook because of the credit card/DRAM issue. It’s snoopy, intrusive, and a disaster waiting to happen. My credit card is no longer their business once the transaction is complete. So there’s another huge number of books B&N isn’t selling every year.

    They seem determined to shoot themselves in the foot.

  10. Nook isn’t doomed, but they’ve put out too many new devices instead of focusing on support for the ones they have. Their customer service is abysmal, and I hate the credit card thing as well. I still use my device, but their stor eand customer service are such crap I rarely buy anything anymore, there are plenty of classics and such out there that I don’t need to worry about DRM or their screwups anymore.

    I hate seeing the calls of their demise, but it is coming. Barring everything else, Amazon customer service is so much better word of mouth is going to switch everyone over to them if nothing else does.

    My reasons for going with nook involved easy sideloading, but that isn’t even the case anymore. One of the last updates screwed how the music player refreshes, so you essentially have to delete all your music and then put it all back on with the new stuff you want. Freaking ridiculous to try to annoy me into using a music store that never materialized for my device. Then the internal drive on this thing only allows 1G of outside content. Because they wanted to push me towards a video store that never materialized.

    As soon as he has time, I am having the man root the hell out of this thing. It is sad that B&N is dying, but at this point they deserve it. How a company can ignore the plethora of complaints about their customer service department all over their forums and the web at large is beyond me, but it will be their downfall.

    • June – I’m confused. You mention ’1G of outside content’. My Nook Colors have a microSD slot – I bought a 32G microSD card for twenty dollars and use that for all my stuff.

      That microSD slot is a big reason why I went with Nook over Kindle. So far I haven’t regretted it.

      (One of my Nooks is rooted, the other is not. I almost excusively use the non-rooted one.)

  11. My guess?

    Look for a lot of smart insiders and BN leadership to sell off their stock in the next few days after this “rumor” of a split ran up the price this morning. Then the Thursday report will cut the price in half and the usual schmucks will be left holding the bag.

  12. I love my Nook Glowlight. BN was first to come out with that technology.

    If BN closes, it will be a disaster for authors and publishers. Publishers have not yet recovered financially from the Borders closing, having lost millions. This, in turn, affects authors and agents.

    I do not want to see Amazon take over the entire book world.

    • If BN closes, it will be a disaster for some authors and publishers. Some will benefit. Some will not be directly affected. It will bother me very little, for instance.

      Amazon cannot take over the entire book world. They have much less control than TradPub had at the height of its power now and they will gain very little if BN closes. If they try to become the Galactic Empire, they will find that the more they tighten their grip, the more star systems will slip through their fingers. If they ever even LOOK like treating readers and authors the same way TradPub has/does, they will merely cause the creation of Amazon: The Sequel.

  13. Anybody who says stuff like “lean a lot more on the comprehensive digital catalog of content” has lost the plot. That is proof that the company has no strategy. Statements that vague always mean that there is infighting about what to do next. There could be anywhere from two to twenty different strategies hiding behind that statement, but you can bet there is no single coherent strategy. Just ask yourself, how would know if that was working?

    • My question about that quote was, “You mean the digital content business WASN’T leaning on their digital content before?” So, what, they were focused on the hardware before? Yeah, talk about losing the plot…

  14. 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.

    I’d suggest not leaning too heavily on that. The benefits of customer lock-in never kick in until you have customers to lock in; and customer lock-in is a good way of discouraging people from becoming customers in the first place. A market leader can sometimes afford to risk that, because market leaders usually benefit from significant network effects. An also-ran generally can’t. And in this market, B&N is an also-ran.

    One of the reasons dedicated ebook readers are in decline is that they all have some degree of lock-in. You can put third-party content onto an e-ink Kindle, Kobo, or Nook, but it’s considerably harder than downloading content from the device vendor. If you have an iOS or Android tablet, however, you can download apps from all the competing vendors and buy from whichever one you prefer. No matter how much the vendors might benefit from locking in their customers, the customers benefit so much from not being locked in that it is worth their while to pay more for a device that easily supports multiple vendors.

  15. I have a 1st gen Nook. But soon after purchase, it became self-evident to me that having all my ebook shopping choices determined by which vendor I got my e-reader from was IDIOTIC, and I would never again buy a reading device on that basis.

    I also chose a Nook rather than a Kindle because I wanted to support Amazon competitors. Not because I hate Amazon (I don’t), but because I think multiple healthy markets is netter for me as a writer than only ONE healthy market, so I was trying to support B&N.

    Now, frankly, I feel like that decision was a pity-f*** and an absurd mistake, since I have been so dissatified with the BN.com experience–which hasn’t improved AT ALL while I’ve been a dissastisfied Nook customer. The website is still clunky and unimaginative. Nook books are still non-returnable (so if you realize you’ve just downloaded the wrong title, tough luck–you CANNOT return or exchange it). In both of these ways, BN.com is vastly inferior to Amazon.com–as it was when I got a Nook thinking I would support BN.com as a customer WHILE IT CAUGHT UP to Amazon in terms of retail services and innovations. Hah!

    BN.com also continues to have a poorer selection of titles and less attractive pricing/deal opportunities than Amazon–in part because it offers virtually no innovations or opportunities to e-vendors, while Amazon experiements all over the place with making e-selling more interesting for selfpublishing writers and more attractive to ebook readers.

    So even if one is satisfied with a dedicated e-reader that has no other functions, the Nook is an extremely disappointing device because BN.com is an extremely disappointing vendor.

    And by now, given the array of tablets out there that offer so much extended functionality in one device the same size/weight as an e-reader, I don’t think a dedicated e-reader makes much sense for most people anyhow. On my next e-reader purchase, I will certainly be willing to spend more money to have a bunch of functions in one device, AND to be able to buy ebooks from whever I want to buy them.

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