Barnes & Noble: Caught between e-book tipping point, tablet wars

Barnes & Noble: Caught between e-book tipping point, tablet wars

Summary: How does the Nook stand out in that crowd? It's not easy. Meanwhile, Barnes & Noble relies on its struggling retail stores to showcase the Nook.

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Barnes & Noble announced disappointing same store sales for December as Nook revenue fell 12.6 percent from a year ago. The bookstore chain now appears to be caught in a vice. On one side, there's a digital book tipping point hurting print sales. On the other is the reality that Nook has a tough time standing out in a crowded tablet field.

nook

In a statement, William Lynch, CEO of Barnes & Noble, said:

"We entered the holiday with two great new products, NOOK HD and Nook HD+, both highly rated media tablets of phenomenal quality. Nook device sales got off to a good start over the Black Friday period, but then fell short of expectations for the balance of holiday. We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward."

I'll save Mr. Lynch some time. Here's what happened to Nook sales:

  1. The Kindle Fire happened.
  2. The iPad happened.
  3. The iPad mini happened. 
  4. An army of Android tablets happened.

How does the Nook stand out in that crowd? It's not easy. Meanwhile, Barnes & Noble relies on its retail stores to showcase the Nook. The problem: Core same store sales at brick and mortar stores fell 3.1 percent from a year ago.

In other words, Barnes & Noble is seeing lower store traffic and that's hampering its ability to plug the Nook.

Overall, Barnes & Noble expects fiscal 2013 Nook revenue of $3 billion.

Stifel Nicolaus analyst David Schick said:

Barnes & Noble pre-announced holiday sales would be weak, but the significance of the deceleration calls into question whether a tipping point in digital is happening - both in charge and impact to brick and mortar book sales. This has always been a potential concern, but evidence is beginning to mount – success of the iPad mini likely pressured sales of Nook tablets, and the Kindle Paperwhite was the clear favorite e-ink reader among critics and reviewers this holiday (beating out the Nook GlowLight and SimpleTouch).

Barclays analyst Alan Rifkin estimates that Nook's three-year cumulative loss will be roughly $729 million. Barnes & Noble is depending on additional distribution through its Microsoft partnership, but Nook's ongoing success is uncertain. Barnes & Noble appears to be in an odd position where e-book sales are hurting its core business and potentially its digital one too.

Topics: Mobility, Amazon, E-Commerce, Tablets

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33 comments
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  • Bad news for book lovers

    I just hope they are able to keep their brick and mortar stores open.
    MajorlyCool
  • No Apps

    I have a Nook color. I'd get something else in a heartbeat if I could justify the expense. No apps, jagged screen performance. The battery is good and the thing seems to be industructible, though! I'd keep it for puzzles and games if they'd only add more popular apps...
    bward11
    • yup

      I have a NOOK Color, heavy and scren res too low for reading (although works for mags in article view). And a NOOK classic, love the eInk for reading but the pseudo-touch screen is horrendous, even when it works. And although I expect their new hardware is better, their limited ecosystem has pushed me to greener pastures.
      frylock
      • Nope

        The Nook Color was the most popular non-iOS tablet the year it was introduced.
        It is extremely easy to root without invalidating the warranty - the new OS (ie. ROM) will boot entirely from uSD, with no mods to the original OS.
        B&N should do what Kobo did - open their machines to the Google market.
        There is no market anymore for expensive ebook readers when tablets do it all.
        radleym
  • B&N got greedy and I took my Nook Back

    Sideloading of apps was necessary because they had few apps on their site and they were more expensive than PlayStore or Amazon's Appstore. Apps I already owned would not work without sideloading. They turned that ability off in the middle of the night and I was upset enough to return it and buy a Samsung Galaxy tab 7 Plus. I haven't purchased an ebook from B&N since.

    If they wanted my loyalty, they'd have treated me better.
    rp518
    • It's not a shock ...

      ... That you were happier with a tablet than with an ebook reader.
      See my post above.
      radleym
  • ...caught in a vice?

    Your spell checker might approve it, but B&N's lawyers could call it libel.
    kidtree
    • No, vice does it for me...

      Kidtree,

      I assume you've never used a vice before. Handy tool. It has jaws either side and is used to grip things together. Very useful in woodwork.

      In this case it would seem to me the word is used absolutely correctly.

      A good number of words have multiple meanings. Vice is but one of them.
      Lost In Clouds of Data
      • Vise, not vice.

        You are wrong in confusing two separate words. Vice does not have two separate meanings. A vise is the tool you mention. Vice is engaging in morally reprehensible behavior
        jejamcl
        • vice and vice.

          The word "vise" does not exist in the English language. However, you may see it erroneously entered in an American dictionary.
          Saxwulf
          • I speak "English" not "American"

            which to the rest of the English speaking world is almost another language!
            Check http://www.thefreedictionary.com/vise
            I still own a pair of "Visegrips" made in Sheffield which are about the same age as me
            Tonydid
        • By golly - look at this - Vice has different meanings!

          vice  - noun
          1. an immoral or evil habit or practice. Synonyms: fault, failing, foible, weakness. Antonyms: virtue.
          2. immoral conduct; depraved or degrading behavior: a life of vice. Synonyms: depravity, sin, iniquity, wickedness, corruption. Antonyms: virtue, morality.
          3. sexual immorality, especially prostitution. Synonyms: wantonness, degeneracy, licentiousness.
          4. a particular form of depravity.
          5. a fault, defect, or shortcoming: a minor vice in his literary style. Synonyms: flaw, blemish, imperfection, foible, weakness.
          6. an appliance for holding an object while work is done upon it, usually having a pair of jaws
          vice - preposition
          1. instead of; in the place of.
          vice - verb
          1. to grip (something) with or as if with a vice

          Sigh. To screw up once is silly. To back the screwup up makes you look foolish...

          You apparently know how to use the Internet. Use it next time BEFORE you post. Even if we take different spellings into account you were STILL wrong!
          Lost In Clouds of Data
          • American vs British spelling

            "Vise" is the standard American spelling for the tool that grips something.

            http://grammarist.com/spelling/vice-vise/http://grammarist.com/spelling/vice-vise/
            karen.l.myers@...
  • why I didn't want a Nook this Christmas

    My wife replaced my Kindle Fire this past Christmas. She specifically asked me why I didn't want a Nook. Here is what I told her:
    If I am going to carry a tablet, it has to meet my needs as a PDA (as in PERSONAL, not corporate) as well as an e-reader. After a year with the Fire, I'm tired of being locked into Amazon's offerings. B&N's devices do the same thing to their owners and offer less.

    For the same money, I preferred the Nexus 7. I am able to run the PDA apps that meet my needs, and I can run BOTH Kindle and Nook on my tablet. Okay, I lose a couple gimmees specific to each retailer's device. That's only a consideration if I actually used those gimmees.

    Oh, and B&N has one other problem. They shut down virtually all their stores in rural America (their B. Dalton Bookseller subsidiary). All they have are their big B&N stores - the nearest one is a 5 hour drive from me - and that's one-way, not round trip. It no longer makes much sense to have an annual membership.
    Jim Johnson
    • Actually, no one is locked into Amazon's offerings

      Amazon, unlike B&N, allows the checkbox which the Kindle Fire owner can mark to allow installation of apps from "unknown sources" -- meaning other appstores (like 1mobile.com and several others. 1mobile.com has 200,000+ apps and they download directly to the Kindle Fire. No usb connection needed.

      If you get a file manager like ES File Manager app (free), the downloaded app is easily found, usually, in the 'download' folder. If not easily found the also-free Easy Installer app will hunt it down on the device, show all app files to you and you can click on the one you want, to install it.

      This is a normal Android feature -- allowing apps from other sources. For some reason techies who like a pure Android device often don't seem to know about it.
      andrys1
  • The Nook seems like a nice tablet - but ....

    If Barnes & Noble made just one single change to the Nook & Nook+, I sincerely believe it would prove to be a worthy competitor against the Amazon Fire HD --- and that is, make it so users could download apps from either or both - the Google Play App market and the Amazon Android App Market.

    B & N's current offering is not near enough for one to consider using the tablet for much more than a high quality eBook reader.
    pauliw25
    • Exactly. The shame is that the B&N staff in my local store are great.

      I get good advice and help from people who love to read books. The people selling the tablets were great to deal with. It's a pity that they locked the Nook and painted themselves into a corner.
      rp518
      • Tough, changing market.

        I owned the original Nook Color. I watched the device slowly evolve as Barnes & Noble executives kept trying to figure out where the device fit into their business model. I watched it go from an enhanced e-reader, and through fits and starts, slowly evolve into an Android fork tablet with its own apps ecosystem. Somewhere along the way I rooted mine and installed Cyanogenmod. At that point it was obvious to me just how constraining the limited B&N ecosystem truly was. Once you've seen Truth and tasted freedom (the Google Play store) you don't want to go back to staring at the flickering shadows of Plato's cave (B&N App Store).

        I wish B&N luck, and I still try and buy my books from them (competition is good, and I don't want Amazon holding all the cards) but they've definitely got a rough road ahead of them.
        dsf3g
  • Work around for limited apps.

    I got the Nook HD+ for three reasons: relatively low price compared with other tablets, the size (just right for me), and the fact that with Android 4.1 installed on a micro SD card, I was able to convert the Nook into a full-blown Android tablet. I'm not sure I can mention the source, but it has been mentioned on the internet by technology bloggers. The OS does have some issues, so it is not for everyone, but I have full access to Google Play Store. So far, I have found only a couple of apps that won't work. I don't even have to re-purchase my paid apps to install them on the tablet. The Nook OS is NOT rooted. I can remove the SD card and the regular Nook OS boots up. For me it is a win-win situation.
    brucegil@...
  • How to fix the Nook

    B&N has to realize that they are not going to compete head on with either Amazon, Apple, or Google. Locking up the Nook makes it an unattractive purchase for most people. So they ought to re-package the Nook as a standard Android tablet, with B&N features not available with the Nook app running on something else. The Nook does have the advantage over the Kindle of having removable storage, but is still seems to be viable only for a customer who doesn't venture too much outside the B&N eco-system.
    spdblp