Is Barnes & Noble Wise to 86 Nook Tablets?
Amazon.com has won. Barnes & Noble (B&N) has lost. That’s pretty much the only way to read the announcement earlier this week that B&N is getting out of manufacturing its Nook tablets and will instead let interested third parties make the device going forward.
"We are taking big steps to reduce the losses in the Nook segment, as we move to a partner-centric model in tablets and reduce overhead costs," said William Lynch, chief executive officer of B&N, in a statement. "We plan to continue to innovate in the single purpose black-and-white eReader category, and the underpinning of our strategy remains the same today as it has since we first entered the digital market, which is to offer customers any digital book, magazine or newspaper, on any device."
The bad news from B&N isn’t all bad, however. According to a Quartz Daily Brief piece on the MSN website, B&N has a 25 percent share of the e-book business and offers significantly more books (3 million) than even Amazon (1 million+). Nook software, according to the piece, is currently available on a wide variety of devices, including Android, Apple, Blackberry and Windows. It also comes preloaded on E FUN Android Nextbook and nabi tablets.
According to PC Magazine, Microsoft may be the third-party to take over making Nook tablets. The computing giant took an 18 percent stake in Nook Media when it launched last October.
Discussion Questions
Do you think Barnes & Noble is making the right decision with its Nook tablet business? How will this move affect the overall tablet market going forward in the near term as well as further on?
Yes—B&N never should have tried to be a hardware manufacturer. Making really good hardware isn’t easy and making it at a competitive price point (when your competitor is selling a loss leader) is even harder.
Tablet (hardware) features/functionality are very important, but e-books are a function of their overall ecosystem. Amazon and Apple have good grips on theirs, B&N probably won’t have such thorough control with 3rd party tablets in the mix, despite their significantly larger number of titles. Likely, the last two nails in this coffin will come when B&N’s two major competitors match them title for title.
I think at some point it will be wise for Barnes & Noble to get out of business all together. Getting out of the Nook tablet business is a good start.
If B&N has a 25% share of the ebook business, why are they abandoning it? Consumers are not going to suddenly flock to their brick and mortar stores. Unless B&N quickly finds a partner to keep Nook alive, Amazon, Apple and other e-readers will quickly snap up B&N’s market share.
B&N is concentrating its resources in its key business, namely, retailing. This move will free up capital used in manufacturing to fight its Internet battles with Amazon and others. As noted in the article, there will be no shortage of tablet manufacturers, made by companies with strong R&D and technology resources.
Only Barnes & Noble knows if they’re making the right decision. If they saw that they needed to reduce overhead costs, they’re probably right. As technology grows and gets more complex, if you’re not completely in, it’s probably best to get out. With a proper exit strategy they’ll do the right thing for their brand.
From a business perspective, this makes a lot of good sense. From a communications perspective, I believe that B&N could have positioned the move so that they looked “smart” not like they “lost.” Negative spin on the business decision doesn’t help consumer confidence in B&N and their offerings. My advice: Hire a good PR Firm. (Or use them better, if one is in place).
Time to cut their losses and move forward. Better to stay with the core business as long as they have a core business to stick with. Seems there are always buzzards flying overhead waiting for the end. Similar to Sears and Kmart
This is a wonderful opportunity to visit a make or buy decision from other than financial practicality. Barnes & Noble spent a good deal of revenue on a venture they were not at all familiar with. The “NOOK” is getting clobbered by real hardware companies that know how to exploit Information Technology’s hardware market for profit and growth. What a surprise! Some corporate decisions are a mistake. Some of the mistakes made, like this one for instance, are fatal as in companies and at the very least, careers.