Barnes and Noble has reported losses in its Nook Media division, which comprises of e-readers and ebooks. The company is going to be announcing its 3rd quarter financials within the next few days, and suffice it to say the company is not going to meet the projected revenue of three billion. A person close to Barnes and Noble has said the company might be gravitating away from hardware sales and instead license out its technology to other companies.
“They are not completely getting out of the hardware business, but they are going to lean a lot more on the comprehensive digital catalog of content,” said this person, who asked not to be identified discussing corporate strategy.
It seems that Barnes and Noble will begin licensing out the Nook Media platform to Samsung and Microsoft to give them a competitive advantage. Pearson and Microsoft were both early investors in Barnes and Noble’s digital strategy. The shift from Nook e-readers and ebooks from being a singular part of Barnes and Nobles bookstore chain and spinning off into its autonomous entity was a strong precursor to licensing its ecosystem to other companies.
Barnes and Noble has seen dwindling interest in its line of hardware. The Nook HD and HD+ were very solid pieces of hardware, but saw diminished market share due to the iPad, Kindle Fire, and Samsung tablets. Why is Nook no longer catching on with the public? One of the big reasons is international customers and support. Barnes and Noble does not let people living outside the UK and USA to buy its products or access its online bookstore. Both of these countries have tons of variety with hardware and most end up going with an Apple product or a Kindle. Competing with hardware does not make fiscal sense and the margins are too low to see any sort of growth.
Tablets right now are starting to mirror the smartphone industry in the last 12 months. You basically have Samsung and Apple controlling 75% of the entire market and the similar thing is occurring with Apple, Amazon, and Samsung. This leaves Barnes and Noble as the odd man out.
Update: Len Riggio, the CEO of B&N has said that he has filed SEC Paperwork to buy all of Barnes and Nobles 689 retail stores and also BN.com. It looks like something major is going to happen with the retail chain and the digital division.
Update 2: Mary Ellen Keating reached out to us to say “To be clear, we have no plans to discontinue our award-winning line of NOOK products.”