Monday, January 20, 2014

Is This The End Of The Nook?

Amazon launched its e-reader long ago, and by being the first, it set the pace.

Barnes and Noble tried to catch up, but once someone bought a Kindle, where was the incentive to buy a Nook? The devices are not inexpensive, and you can get the same books on one as the other. Then there was Apple's iPad, another tough competitor in the e-reading market. The iPad could do more, giving the buyer more value, which put the Nook that much further behind the pack.

Rather than surrender, the number two book retailer brought in all sorts of executives to turn things around.

To keep up with chaging technology, the Nook was altered and improved and tweaked, but the changes were slight. A better reading experience, a different screen, less eye strain, whatever sounded like a vast improvement was tried but still Nook remained well behind.

The man who came in to head Nook's media division was promoted in January, to head Barnes and Noble. Michael Huseby clearly knows what is going on with Nook because he was running it. That a couple of senior Nook executives have just left, so soon after Mr. Huseby has become CEO, is giving stockholders an indication that the Nook division just might end up liquidated.
The Nook or the business model is broken

The white flag of surrender may be on its way up the flagpole.

The international outreach program is soon to be without a director, and there are no names being floated to suggest a replacement is in the offing. Another executive left to work for Wal-Mart. You might draw an analogy to rats leaving a sinking ship, given the abrupt departures. Easy to picture the memos from Mr. Huseby on his first day at the top, suggesting that his former underlings at the Nook division would be well advised to move on while they had the chance.

Where Amazon has an advantage over Barnes and Noble is the lack of brick-and-mortar locations to be staffed and maintained. Amazon never had actual shops as part of its core, whereas Barnes and Noble began as a traditional bookseller. Those savings could be used to lower the price of books, but for a buyer, the savings might not be justified if they wanted a physical book without waiting three to five days for delivery. Having a store could be a plus for Barnes and Noble, but if headquarters wants to maximize the experience, it takes money, and what's the point of pouring money into a failing enterprise when it could be better invested in something that can set the corporation apart from its competitor?

The Nook division is dragging down profits for the corporation overall, and so something must be jettisoned to lighten the load. To boost stockholder value, then, the weakest member of the BN empire must go, and it appears to be the Nook. can continue to sell e-books, of course, and it can use Smashwords to access all available platforms to offer customers the opportunity to purchase for whatever device they have. That eliminates the expense of technology upgrades to chase after Apple, which is so far ahead of the Nook that there clearly is no catching up to be done.

People still want real books, even though the digital versions are popular. They still like to browse in bookstores and enjoy the instant gratification that comes with carrying the desired book to the clerk and then making the purchase, to bring the book home for a night's reading. The exit of several Nook executives suggests that Barnes and Noble is returning to its core, to take on Amazon as a seller of books, both online and in the old-fashioned, quaint, but still desirable shop.

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