Barnes and Noble has been designing e-readers since 2009 and the bookseller has released over 7 different devices with two more on the way shortly. When they first got into the game their products were very distinctive in the marketplace and they stood out in a crowded marketplace. Customers responded and the first four years were very kind, in terms of sales and satisfaction levels among users. Where did it all go wrong?
The world was a very different place in 2009 when Barnes and Noble first started to get involved with making their own e-readers and developing a fully fledged digital bookstore. The only players of note in the industry was Amazon, who had yet to develop any kind of retail sales channels and Sony who had very good distribution. Part of the booksellers early success was being able to push their hardware in hundreds of bookstores all over the US and trained staff that could address questions and concerns.
The same year the Apple iPad was released in 2010, B&N had a few e-ink readers under their belt and decided to release a very unique Nook Color. This device featured a very innovative design and instead of using a vanilla version of Android they heavily skinned it, similar to what Amazon did with their Fire OS. Customers loved what B&N was doing on the tablet front the Nook Color was their most successful tablet ever, with millions sold in Q4 2010.
Over the next few years Barnes and Noble hoped to capitalize on the emerging tablet industry by released the Nook Tablet, Nook HD and Nook HD+. This is when things started to go downhill for them, because it was too many devices released in a short period of time. They were quite expensive as well, and many people said “why should I spend $269 on a Nook HD+ when I could spent $100 more and get an iPad”
The Nook HD line of tablet was the last ones that Barnes and Noble ever designed themselves and featured a heavily customized OS. In 2014 a business partnership with Samsung was established where the South Korean company would use existing hardware and simply have some Android apps loaded on them. In order for this relationship to work, the bookseller had to commit to buy over two million of them and failed to meet their goal. Customers were very apathetic about these new devices because the resolution and overall hardware paled in comparison to the older Nook HD and Nook HD+.
In 2015 Barnes and Noble continued to cultivate their relationship with Samsung and released the Galaxy S2. In a few days they should be announcing a 9.7 inch tablet that should hit the retail sales channels of about $259 and a next generation Nook Glowlight Plus e-ink reader.
How did Barnes and Noble lose their way and how did they lose almost a billion dollars in five years? The main reason was the hyper competitive tablet industry and B&N primarily focused on the US market, while their competition focused on international expansion. The second was scaling back their R&D center in Santa Clara and outsourcing all future hardware to other companies. For example, the new Nook Glowlight Plus e-reader is the first one that was entirely outsourced to Netronix, a Taiwanese company that designs all of Kobo’s e-readers. The 3rd reason is executive leadership, the bookseller has had 3 CEO’s in the last four years and there has been mixed messages on the future of the brand
Here is a timeline of all of Barnes and Nobles missteps that cost them their users and encouraged them to flee to Amazon, Kobo and other companies.
The Nook Tablet Debacle
The first major disconnect between Barnes and Noble and their growing user base was December 21st 2011 when the company disabled the ability to sideload in apps from other Android markets. The 1.4.1 firmware update for the Nook Tablet closed a loophole that allowed people to install apps via the internet browser. Since it was around Christmas many people received this tablet as a gift and thousands of devices were returned, while the Nook Boards blew up with angry customers who said they would never do business with the company again.
Lack of Memory Angers e-reader Loyalists
In April 2012 Barnes and Noble unveiled their second generation Nook Simple Touch for $139. The prime selling point behind this model was the front-lit technology. Ironically B&N was a pioneer in this new lightning technology and the entire industry cloned their LED system later that year.
People did not realize how much the Nook e-reader brand has changed until they started to read the fine print. For the first time ever Barnes and Noble edited the memory partition to only allow 500 MB of user loaded content, even though there was 4 GB of total on-device storage. This now prevented users from adding their entire e-book library to their e-reader, which drove many ballistic.
Thousands of users returned their devices and the Nook Boards blew up once more in a feeble attempt to show the company their disdain and to try and get them to reverse the decision. As always, B&N did not listen to their users and begun to slowly lose the e-reader war to companies such as Amazon and Kobo.
You Can No Longer Backup your e-books
In early 2014 Barnes and Noble removed the ability to download eBooks that customers had purchased from the online Nook Store to their computer. They did this so users could not strip the encryption or read the Nook books on 3rd party e-reading apps. This was considered the last straw and many loyal Nook users and they began to openly mock the company for being out of touch.
Barnes and Noble Outsources Nook Design to Samsung
In August 2014 Barnes and Noble made the internal decision to outsource their new line of Nook tablets to Samsung. The end result was the Samsung Galaxy Tab 4 Nook 7 and 10.1 inch editions.
The funny thing about this move is that there is no Nook branding anywhere on the physical device. The only aspect about the tablets that remotely have anything to do with Barnes and Noble is a few customized apps to browse the online bookstore and view your purchases.
The move to do business with Samsung resulted in B&N losing its cultural identity as a hardware business and now they just make apps and sell e-books. Many in the business thought this was a very poor decision and in the months leading up to the new hardware, many top executives were fired.
The Windows 8 reading App alienates international users
Barnes and Noble has been operating a Windows 8 e-reading app since 2012 that allows users to buy e-books and magazines. It is available in 40 different countries and instead of paying the bookseller directly it’s done via your Microsoft Account. Did you like using this app on your PC, smartphone or tablet? Sadly, its being discontinued and all purchases will be lost.
The largest bookseller in the US has announced that they are closing the Nook app for Windows 8 on August 7th 2015. The only two markets that will have access to it is the US and UK and everyone else will no longer be allowed to open any Nook related content.
An Email was sent out to all international users who have purchased an e-book or magazine. It stated “We recently announced that Barnes & Noble and Microsoft have agreed to terminate their commercial partnership. As a result, payments through your Microsoft account no longer supported. In addition, the NOOK App for Windows will from August 7, 2015 are no longer available outside the United States. This means that your NOOK content can no longer open on a Windows platform.
Barnes and Noble Redesigns their Website
Barnes and Noble has been working on a massive upgrade to their website for the last two years. The new design gives us a sense on what the bookseller is hoping to sell more of, which are lifestyle products, print and e-books. It went live in the summer of 2015 and unfortunately there are a number of bugs with e-books and Nook that are preventing people from reading and this is resulting in a fair amount of apathy.
When the site first launched customers could no longer read books using the built in reading software. There were many 3rd party resellers who also used the eCommerce aspect of their site and many were unable to get paid properly or list their products. There continues to be broken links and customers are unable to purchase Nook books correctly, months later.
What can B&N do to save Nook?
Barnes and Noble is a fine example of how one minute you could be the toast of the town with revenue steady rising every quarter and making hundreds of millions of dollars per year to generating a fraction of it.
There is no quick fix to save Nook, years of poor leadership on the executive level and no multi-year plan has destroyed all of their credibility.
The only way Nook can survive is if they get out of making tablets completely and focus on innovating their e-reading apps for Android and iOS. I would also recommend biting the bullet and start selling e-books and other digital content in their iOS app, something they used to do, but pulled purchasing away when Apple wanted 30% of each sale. I know plenty of people that don’t like doing business with iBooks, but there are few alternatives to buying e-books directly within an app on the iPhone and iPad. Barnes and Noble could make e-books work on iOS, but it would warrant pushing people to buy their VIP memberships in the store and getting discounts using the app. I also encourage them to release a new e-reader every year.
In the end, the lack of ambition to expand selling e-books, e-readers and tablets outside of the United States and United Kingdom will likely be the end. The bookseller steadfastly refuses to expand into international markets, even though there are plenty of superstar publishing executives in New York that would jump ship to Barnes and Noble with the right offer and help them with an expansion effort.