Barnes & Noble teams with Samsung to revive Nook tablet sales
Barnes & Noble and Samsung Electronics have announced a new deal to develop co-branded Galaxy Tab 4 Nook tablets that will come with pre-installed apps from the bookseller and a Nook homescreen. A seven-inch version is scheduled to launch in Barnes & Noble’s stores and on its website in August.
The deal, according to Barnes & Noble CEO Michael Huseby, will allow the company to concentrate on what it is good at and not get bogged down trying to be a tablet manufacturer.
"Standing behind these great new devices will be the power of our 40,000 Barnes & Noble booksellers combined with our deep bookselling and retail expertise to provide sales support and personalized in-store customer service for our lineup of new Samsung Galaxy Tab 4 Nook products," said Mr. Huseby in a statement. "Partnering with Samsung brings our customers great new products and evidences our commitment to our NOOK customers and growing our digital content business."
David Strasser, an analyst at Janney Montgomery Scott, is bullish on the news. In a note to clients he wrote that the deal would "drive cutting-edge designs as well as dramatically cut losses" for Barnes & Noble.
- Samsung and Barnes & Noble Announce Partnership to Create Co-Branded Tablets – Barnes & Noble, Inc.
- Barnes & Noble to Team With Samsung on Next Nook Tablet – Bloomberg News
- Barnes & Noble to develop new Nook tablet with Samsung – Reuters
- Barnes & Noble enlists Samsung for Nook tablet – The Associated Press/USA Today
Discussion Questions
What will the partnership with Samsung mean for Barnes & Noble’s Nook business? Do you think there will be a market for the new Nook outside of Barnes & Noble’s stores?
The partnership will somewhat increase sales, but it will not turn Nook into a competitive force in the tablet arena. Why buy a Nook when iPad and Kindle dominate the tablet marketplace and Microsoft and other computer manufacturers are all pushing convertible computers?
The Nook is caught between a rock (Apple) and a hard place (Amazon). The Kindle app is cross-platform and just makes it too easy for consumers to ignore the efforts by Barnes & Noble.
Amazon established a position where they win regardless of whether the customer buys their own hardware or uses any other tablet with the Kindle app. To them, it’s about the app as delivery vehicle and the hardware landscape is a battleground they don’t have to win.
Do what you do best … and outsource the rest.
There is no way that Barnes & Noble can be competitive in building a tablet in today’s marketplace. The value prop for Barnes & Noble is delivering rich content to consumers who prefer to consume digital media. They need a way to compete with Amazon and Kindle. Barnes & Noble struck the right deal with a great partner in Samsung who has the market share and capacity to quickly evolve the tablet platform needed.
On the surface, deal does not seem so compelling for Samsung, who already has major share of the tablet category. However, by this holiday season there will literally be hundreds of tablets available starting at $99. Differentiate or die. Samsung’s partnership with Barnes and Noble is one way to differentiate, and potentially subsidize a better tablet with services and media revenue.
This still seems to be like VHS versus Betamax. This time it’s Kindle versus Nook. Most would say that Amazon’s Kindle is the odds on favorite for a couple of reasons. First, is they have the reasonably priced “reader.” More importantly, you can put the Kindle app on your phone, iPad, PC or tablet, so you don’t even need the reader read the books.
If Barnes & Noble wants to compete with Amazon, the only place they may be able to do it is online. Granted I love going to the bookstore and browsing; when I want a book right now, I download it from Amazon. The Samsung play is good as it gives the Nook platform some credibility and probably more customers. But is it enough to stay in business against Amazon?
“…will allow the company to concentrate on what it is good at.”
Which is what exactly? It runs a distant second in book sales behind Amazon, and is third – or worse – in coffee shops (behind Starbucks, Dunkin’ Donuts and who knows who else). It’s true it has a wide lead in B&M book sales, but to no small extant that’s because its competitors have gone out of business…and you can’t keep growing by taking market share in an industry that’s dying (bookstore unit sales are down more than half over the past decade.)
This partnership with Samsung will give Barnes & Noble the opportunity to focus on curation of their digital collection of books, magazines and newspapers, and should prove to be a lifestyle product that resonates with their loyal fans, you know, the ones that hang out in the bookstores all day.
With this co-branded Galaxy Tab 4 Nook, customers will get an awesome Android operating system to browse the digital collection and pre-installed apps. Sounds like a set-up to compete with Amazon and the iPad, on a small scale to start, but who knows what the future holds.