From Digital Book World:
Barnes & Noble will no longer produce new tablet devices as it transitions to a “partnership model” on color tablets, the company announced today in its fourth-quarter and full-year earnings report. The company also announced greater than expected losses for the quarter of $122 million or $2.11 per share on $1.3 billion in revenue.
Investors expected sales to fall to $1.33 billion and a loss of $0.99 cents per share for the quarter. For the full year, the company’s results weren’t much better, following a disastrous holiday quarter in which it became apparent that Nook tablet sales were struggling.
. . . .
According to the company, it will still sell and service its existing fleet of tablets — the Nook HD and Nook HD+ — through the holiday season. Content sales may not suffer much.
“A majority of content sales come from non-tablet sales,” said Barnes & Noble CEO William Lynch.
Barnes & Noble has a three-pronged plan to advance the company, according to Lynch, speaking on a conference call this morning:
1. “Sustain our effort started in Q3 to significantly reduce operating expenses in the Nook segment,” he said. “We were able to cut expenses $26 million in Q4, a 34% decrease in spending.”
2. The company also intends to continue to enhance its digital bookstore service and reading app. It adds 4,000 titles a week. “We get extremely high ratings from our millions of customers,” said Lynch.
3. The company will also, as was discussed above, “adjust” its hardware and device strategy, moving away from . . . building tablets and toward a co-branded tablet program. “Our aim is to sell tablets,” he said, adding, “but to do so without the up front risk.”
The company plans to continue to design and “innovate” when it comes to new e-reader products like the Nook Glo and Nook Simple Touch. According to Lynch, Barnes & Noble “can manage this device business efficiently.”
“We are 100% not exiting the device business but we are materially adjusting our approach in the…business,” Lynch emphasized.
Link to the rest at Digital Book World
PG predicts nobody serious will be interested in acquiring the Nook tablet business. Amazon, Google and Samsung are pushing the price of tablets down and Apple owns the high end. Where does a Nook tablet fit in that competitive environment? Nowhere very promising.
The only advantage Nook ereaders and tablets ever had was that Barnes & Noble featured them in its bookstore kiosks. Done right, that strategy might have succeeded.
However, Amazon aggressively pushed ebook prices down while Barnes & Noble allowed publishers to set prices. Nook buyers soon discovered they were paying more for ebooks than Kindle owners and some Nook folks felt like suckers.
Amazon was also willing to lose money on ereaders which meant the Nook division always bled cash. Shareholders have bought into Amazon’s strategy to sacrifice profits in order to rapidly grow the company. Barnes & Noble shareholders don’t have the same attitude.
The Nook book store was never very good for discovering books and certainly no match for Amazon’s ecommerce genius. Amazon’s store also treated indie authors better and KDP Select turned out to be a big draw for some indies. The Prime lending library was another cool idea for readers and indie authors.
One of BN’s biggest problems is that the Nook kiosks are endangered because Barnes & Noble has announced it’s going to close lots of stores. The one advantage Nook had over Amazon – a retail presence with sales reps who could hand-sell devices – is wasting away.
A big tech company would seem to be the best candidate to acquire the Nook business, but tech companies and their shareholders know one thing – It’s a losing proposition to compete head-to-head with Amazon.