Home » Bookstores, Nook, PG's Thoughts (such as they are), Tablets/Ereaders » Barnes & Noble to Discontinue Nook Tablet Business, Continue With E-Readers

Barnes & Noble to Discontinue Nook Tablet Business, Continue With E-Readers

26 June 2013

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.

Bookstores, Nook, PG's Thoughts (such as they are), Tablets/Ereaders

17 Comments to “Barnes & Noble to Discontinue Nook Tablet Business, Continue With E-Readers”

  1. 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.

    Er… the main advantage I had from my first Nook was that it was super easy to root. The main advantage I have from my current Nook is that I don’t have to — it has full access to the Google Play Store. Which means, if you’re wondering, that I have the Nook reader, Kindle reader, Kobo reader, Google Play reader, X-Comics reader, and a few other readers all loaded on it, as well as a few other “media consumption” apps Amazon won’t let you load on the Kindle Fire.

    I’ve never once used the B&N kiosk thing.

    The Nook HD and HD+ tablets are pretty solid general purpose tablets, especially for the price. Kindle Fire is comparable in terms of specifications but they don’t give you Google Play access, so their use is limited by comparison. I could see someone interested in selling a general purpose tablet being interested in the brand.

    • I bought my wife a Nook HD+ for her birthday (which is probably what caused this announcement) and told her she could install the Kindle App on it. She said, “Okay, but it just feels wrong.” 🙂

      I was aware that Nook’s nook was rocky, but as you say, as a GP tablet it’s actually quite reasonable, especially at the recent fire-sale prices. Reviews indicated that even if I was just buying her a tablet (she didn’t have one) it was a reasonable purchase decision.

      I never would have bought it had they not, as you also point out, recently opened Google Play and basically rooted the machine for me. 🙂 I am more than capable of rooting a tablet but it wasn’t for me, it was for her, and she is not techy. I didn’t want her to have to deal with it.

      And incidentally, she loves it.

  2. I would guess that the “partnership model” will involve some sort of deal with existing tablet makers to preload a Nook app and maybe add a B&N logo to the box.

  3. I’m wondering whether I need to get one of those heavily discounted tablets now and replace my wife’s aging Nook tablet, or just transition her later to an android tablet or an mini ipad, later. Hmm…

  4. I’m not sure if Barnes and Noble could ever have beaten Amazon. Reading your commentary, PG, I think there may have been too many cards stacked against it.

    As for who should buy Nook? Amazon should buy it, and give all Nook owners a Kindle app until they upgrade. That might be alittle weird given they are in direct competition with B&N, but I think Amazon should buy Barnes & Noble anyway, so I could see it working.

    • There are very, very few organizations that can beat Amazon at something Amazon takes seriously, Mira.

      • I think you are absolutely right, PG. I think it may be the the customer orientation. Powerful.

      • EXACTLY. I keep telling people that Amazon is taking on Walmart, Apple, and Google, all at the same time, and beating them all handily. Only Apple is really standing up to them, but that’s because the two companies approach their tablet sales differently. In terms of content sales, Amazon is obliterating them.

        Amazon is NOT a company to take lightly.

    • You can already download the Nook reading app to the Kindle Fire because Amazon allows the downloading of apps from sources other than Google Play.

      With access to Google Play, a NookHD owner can easily download and use the Kindle app.

      I’m not sure that Amazon would even have to buy the Nook operation, they could just try a media blitz or something to make sure Nook owners know the above information.

      I do think having the customer data on Nook owners might be worth something to them though.

    • It’s not about beating Amazon, Mira.

      B&N sells books and a few trinkets on the side. Nook sells digital media.

      Amazon sells anything and everything.

      Obviously a bookstore is not going to “beat” a bookstore combined with an everything else store and huge cash. That was never B&N’s intention.

      Just because two entities trade the same product does not mean one is trying to “beat” the other.

      • From what I’ve seen (and I’ll admit I haven’t been in one for well over a year) it’s more trinkets than books nowadays.

        That’s actually their biggest problem, IMO. B&N is becoming a trinket store masquerading as a bookstore.

  5. I had a Nook for 2 years, didn’t buy that much, for many of the reasons PG states–website clunky, prices higher than Amazon, selection not as good, items non-returnable (so I became even more unenthused about the system after accidentally buying an $11 ebook with a nearly-identical title to the ebook I actually -wanted-, and discovering I couldn’t return it, get credit, swap, NOTHING).

    Last month I bought an iPad Mini and immediately installed the Kindle and Nook apps. I’ve bought lots of books from Amazon in the past month… and not even ONE from Nook, I realized today. The system, the selection, the prices, the return policy, the upgrading, the way titles are organized and displayed… all SO superior on Amazon, there’s no way I’d go back to buying ebooks from B&N.

    Yet I bought a Nook 2 years ago because I WANTED there to be a competitive and diverse vendor marketplace, rather than just one successful giant with too much power. I stuck with the Nook even after I (yup) felt suckered–there were no improvements at all in ebook pricing and marketing and services for 2 years at BN, while Amazon offered one innovation and upgrade and experiment after another after another.

    Enough already.

    I still want to see a strong competitor for Amazon. I want to see SEVERAL strong competitors for Amazon. The more really innovative and powerful players in the emarket, the better for writers and readers… And it just keeps not happening.

    • You know the best way for there to be a good, competitive market, though? It’s for the worst competitors to die off. Nothing teaches startups how to compete better than a clear victor between giants. We want new competitors to iterate off of the better service, but the emotions apparently involved in traditional bookselling are still around to tempt them away.

  6. It’s ironic that B&N is getting out of the tablet business just when they begin to do it right. Being a hardware junkie, I have a Kindle Fire, Nexus 7, have rooted a Nook Color and Nook Tablet (OK but slow). My wife has a Nook Touch. I bought a Nook HD when they announced the addition of the Google Play app store. I have to say that the Nook HD and HD+ with the 2.1 software is an incredibly nice tablet without the limitations of the Amazon ecosystem of the Fire (not that I complain as I love Amazon and its ecosystem). You can run any Android app available through the Google Play Store. It also has the advantage over the Nexus of having an SD card expansion slot. When they dropped the price of the HD to $129, it became an unbeatable bargain.

  7. John Nicholas Datesh

    It is too bad. The Nooks are solid products, but it is a brutal market.

    I have a Nook HD+ and mostly use Amazon/Kindle on it. The HD+ is a very nice tablet (with the Google connection), though I overpaid by buying for a mother rather than a father.

    I had already bought a Nook for my sister and a Kindle Paperwhite to replace my own Gen I Kindle. I prefer them to the tablet for reading, but the tablet has proven better than I expected as an e-reader. I just turn down the back-light.

    If you are looking for a nice tablet at a silly price, get the Nook HD+.

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