Barnes & Noble to exit cutthroat tablet hardware business, let partners build Nooks
While Barnes & Noble hoped its custom-built Nook tablet could compete with the likes of Apple's iPad and Amazon's Kindle Fire, continued losses for the bookseller have forced it to exit the hardware manufacturing business, leaving third-party partners to build future Nook devices.
As part of the company's quarterly earnings report on Tuesday, Barnes & Noble revealed that it plans to limit risks associated with manufacturing hardware. While the company will continue designing e-readers, it will transition the manufacturing of that hardware to third-party partners.
Nook revenues were down 34 percent in the company's just-concluded quarter, at just $108 million. For the full fiscal year, Nook revenues were down 16.8 percent.
Barnes & Noble cited lower selling volume of Nook hardware, while content sales were also down in the fourth quarter, as series like "The Hunger Games" and "Fifty Shades of Grey" boosted sales a year ago.
While the bookseller's color touchscreen tablets have struggled against the iPad and Kindle Fire, Barnes & Noble has found success with its black-and-white e-ink reading devices. As such, its Simple Touch and Glowlight products will continue to be developed in-house.
"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 Barnes & Noble Chief Executive William Lynch. "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."
Barnes & Noble attempted to compete more directly with Apple's iPad and Amazon's Kindle Fire HD when it introduced a 9-inch Nook HD+ last September. That device has a high-resolution display packing in 256 pixels per inch, and launched at $299 for a 16-gigabyte model.
But Barnes & Noble is currently selling the 16-gigabyte Nook HD+ tablet for just $149, as part of a "limited time" offer. The 7-inch entry-level 8-gigabyte Nook HD has also been discounted to $129, down from $199.
HP took a similar approach with the TouchPad in 2011, when the hardware was discontinued and remaining inventory was sold for $99. However, Barnes & Noble said Tuesday it plans to continue offering its Nook HD and Nook HD+ at "amazing prices" through the holidays.
Despite a surge in competition in recent years, Apple's iPad remains the dominant platform in the tablet market. The company is expected to update its iPad and iPad mini with new models later this year.
As part of the company's quarterly earnings report on Tuesday, Barnes & Noble revealed that it plans to limit risks associated with manufacturing hardware. While the company will continue designing e-readers, it will transition the manufacturing of that hardware to third-party partners.
Nook revenues were down 34 percent in the company's just-concluded quarter, at just $108 million. For the full fiscal year, Nook revenues were down 16.8 percent.
Barnes & Noble cited lower selling volume of Nook hardware, while content sales were also down in the fourth quarter, as series like "The Hunger Games" and "Fifty Shades of Grey" boosted sales a year ago.
"We are taking big steps to reduce the losses in the Nook segment" - Barnes & Noble CEO William Lynch
While the bookseller's color touchscreen tablets have struggled against the iPad and Kindle Fire, Barnes & Noble has found success with its black-and-white e-ink reading devices. As such, its Simple Touch and Glowlight products will continue to be developed in-house.
"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 Barnes & Noble Chief Executive William Lynch. "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."
Barnes & Noble attempted to compete more directly with Apple's iPad and Amazon's Kindle Fire HD when it introduced a 9-inch Nook HD+ last September. That device has a high-resolution display packing in 256 pixels per inch, and launched at $299 for a 16-gigabyte model.
But Barnes & Noble is currently selling the 16-gigabyte Nook HD+ tablet for just $149, as part of a "limited time" offer. The 7-inch entry-level 8-gigabyte Nook HD has also been discounted to $129, down from $199.
HP took a similar approach with the TouchPad in 2011, when the hardware was discontinued and remaining inventory was sold for $99. However, Barnes & Noble said Tuesday it plans to continue offering its Nook HD and Nook HD+ at "amazing prices" through the holidays.
Despite a surge in competition in recent years, Apple's iPad remains the dominant platform in the tablet market. The company is expected to update its iPad and iPad mini with new models later this year.
Comments
That's too bad. Less competition. The interesting thing about the Nook is that B&N had a different business model than other tablet vendors. Too bad they couldn't cut it.
How's B&N going to survive with only its bricks and mortar store going against mighty Amazon? If it too goes under, libraries will become more precious as a place for reading.
Good for B&H. I really feel bad to see those tablet show-case tables with no human being at least try to test it. Surprised, it had partners to build them and they still continue building it.
Quote:
Originally Posted by stelligent
That's too bad. Less competition. The interesting thing about the Nook is that B&N had a different business model than other tablet vendors. Too bad they couldn't cut it.
How's B&N going to survive with only its bricks and mortar store going against mighty Amazon? If it too goes under, libraries will become more precious as a place for reading.
I agree...the Nook along with others had a specific use case......
I have seen people reading in the sun with Nooks and similar products. I could not do that with my iPad.
But then my iPad does so much more....
Quote:
Originally Posted by Cletus
Crush the enemy, see them driven before you, and hear the lamentation of their women.
lol....you watch too much TV.......
I wonder what partners are going to build Nooks for them?
Quote:
Originally Posted by Rogifan
Were they reading in the sun with the Nook color?
I wonder what partners are going to build Nooks for them?
It was the BW Nook in the sun....I was a little surprised it worked so well.....
But then again reading in direct sunlight is a very specific use case.
I actually bought a 16GB Nook HD+ a few weeks ago; all the major electronics retailers are selling them for $150 ($180 for the 32GB model). 9", 1.5GHz dual core, 1920x1280 display, microSD slot.
The stock Nook software is junk, so I installed CM10.1 for the stock Android 4.2.x experience and it's great. The only thing I don't like about it is that the touch screen isn't quite as accurate as on my iPhone 5 or my previous iPad tablets, but for $150 I can't really complain.
I mainly just use it to browse the web (I tether it to my iPhone 5 via Bluetooth when traveling) and watch movies. I bought a Class-10 32GB microSD card for $22 to store my movies, which look great on the screen.
This was more or less an inevitable outcome. The hardware itself just isn't that great and doesn't compete, and the user experience is not particularly compelling. The two together ensured that their hardware had to be a loss leader. As a matter of fact, I'm not sure how they could ever turn a profit designing their own hardware and having it contract manufactured. Way too much overhead.
They were head-hunting me months back for a high-level UI post and I'm glad I didn't bite. I feel badly for all those people this is going to impact; they just opened a new Nook dev. campus this year as I understand it.
Heh.
January 2010 was an interesting time. I remember the debates I had with people who swore up and down that the "giant iPod Touch" would be a titanic failure, a monument to Steve Jobs' reality distortion field. Conventional wisdom was that tablets were dead. That only the Apple faithful would ever buy a giant iPod Touch. Conventional wisdom at the time: tablets will never sell! Steve is crazy! Even Eric Schmidt thought Apple had gone too far.
They are all iPad users now.
Funny how revolutions happen. Now everyone is stumbling over themselves to sell touch screen tablets.
Quote:
Originally Posted by stelligent
That's too bad. Less competition. The interesting thing about the Nook is that B&N had a different business model than other tablet vendors. Too bad they couldn't cut it.
How's B&N going to survive with only its bricks and mortar store going against mighty Amazon? If it too goes under, libraries will become more precious as a place for reading.
Barnes & Noble is not exiting the e-reader and tablet business. They are merely going to partner with a third-party to develop the product going forward.
Quote:
Originally Posted by Suddenly Newton
Heh.
January 2010 was an interesting time. I remember the debates I had with people who swore up and down that the "giant iPod Touch" would be a titanic failure, a monument to Steve Jobs' reality distortion field. Conventional wisdom was that tablets were dead. That only the Apple faithful would ever buy a giant iPod Touch. Conventional wisdom at the time: tablets will never sell! Steve is crazy! Even Eric Schmidt thought Apple had gone too far.
They are all iPad users now.
Funny how revolutions happen. Now everyone is stumbling over themselves to sell touch screen tablets.
The iPad was an exercise in what Apple does best - get the implementation right. I had many colleagues who were sure iPad would flop because tablets had flopped before. They couldn't see that the core value proposition of a tablet was an insanely great one... that the problem with earlier devices was that they had failed to implement in a way that made the value proposition realizable.
The details matter. It's not always about the revolutionary idea; sometimes it is just about implementing the details the right way. Greatness is an emergent property.
Seems to me that the fad-phase of ebook readers is now passing. Yes, there will continue to be users and specific applications, but I think we'll now see a resurgence of hardcopy print books, and the stores that sell them. And that will please me. A niche opens to new entrepreneurs!
Because no matter the platform, electronic books:
1. Don't make nice presents.
2. Have annoyances that eventually impede casual reading (battery, software, lighting, DRM).
3. Aren't as durable or convenient as a paperback or magazine in the back pocket (or purse).
4. Can't survive the "surprise wave" at the beach as I'm laying there, reading.
5. Aren't as much fun to shop for, as browsing in a cool brick-and-mortar shop on a hot summer day.
6. Require me to remember YAP and login, just to buy a book. (YAP=Yet Another Password).
7. Continue to be over-priced, given the zero cost of reproduction.
8. Don't look nice on the coffee-table or shelf. ("Books are awfully decorative, don't you think?" --Gloria Upson)
9. Can't be as immediately or conveniently bookmarked, annotated in the margin, or passed around to friends.
10. Don't attract the casual conversation of strangers (such as reading Dickens at the coffee shop, or Juggs at the barbershop).
11. Can't be easily offered as reading material in waiting rooms (hospitals, dentists, etc.)
12. Still can't be read during taxi-and-takeoff on an airplane.
Not as convenient as a paperback? You have got to be kidding. I used to carry 4 or 5 books on a trip. An e-reader or iPad with hundreds or thousands of books loaded on it is far more convenient and gives me much more choice. Ebooks as gifts work for me.
There is one exception, I'm seriously considering buying the Virginia edition of Heinlein's published works.
Quote:
Originally Posted by Chick
Not as convenient as a paperback? You have got to be kidding.
Not kidding. To me, convenience means I don't have to worry about it breaking. I can mindlessly stuff it in my back pocket and go. And sit down. And still read it when I pull it out of my pocket. Nook? No way.
Quote:
Originally Posted by geekdad
It was the BW Nook in the sun....I was a little surprised it worked so well.....
But then again reading in direct sunlight is a very specific use case.
I have an iPad, and it's great. Yet, I also have a b&w (eInk technology, like the b&w Nook) Kindle PaperWhite for reading outside, in direct sunlight, at the pool/beach/vacation, etc. For reading-only, the PaperWhite is actually a better experience for that.
eInk advantages:
- don't have to worry [quite as much] about damage, given the relative price.
- lighter than an iPad
- can be read in direct sunlight