Barnes and Noble fired CEO Ron Boire last week, claiming that he was not a suitable fit for the company. The nations largest bookseller has begun the process of finding their third CEO in less than three years. The lack of leadership will set the company back almost six months, as new executives will replace existing ones. This entire situation could not come at a worse time, as major publishers are gearing up for the most lucrative time of the year, the march towards Christmas.
The firing of Boire has industry insiders scratching their heads. He has a big vision for the company, which he outlined on June 23 during a two-hour investor presentation in which he was joined by other B&N executives. During that meeting, B&N reiterated its intention to continue to downsize its Nook business, upgrade e-commerce site and open four new concept stores, the first of which is set to open in October in Eastchester, N.Y. The centerpiece of the new stores will be an expanded café that will serve “American-style fare” plus beer and wine.
I dig the fact that Barnes and Noble is investing in upgrading their retail stores, but I really have to wonder if beer, wine and hot food will be bringing in people who are going to be buying books. B&N executives are being very cagey on what the concept stores will entail and how it will bring in new customers.
When Ron Boire was first appointing to being the CEO, I was very skeptical. He did not come from a modern tech background and did not have book selling experience. When it was first announced that he was going to be the incoming CEO, I proclaimed that he would kill the Nook. During his short reign he closed down the Nook digital bookstore in the United Kingdom, scrapped the Nook App Store and Nook Video Store and closed down their R&D center in Santa Clara. The Nook is not officially dead yet, but it is on life support.
One of the big reasons why the Nook has been gutted and is in utterly deplorable shape is primarily due to the Boire appointed executive Fred Argir. Fred was the chief digital officer at Toys R Us and prior to that, he was Chief Information Officer at The Sports Authority based in Denver, CO, where he led the organization through a formal web redesign, incrementally increasing page conversion through a focus on improved usability and experience. He also served as a consultant to Best Buy and before that Target. Needless to say, Fred has zero experience with e-readers, tablets and developing apps, nor does he have any idea on how to compete against Amazon.
Speaking of Amazon, earlier this year Argir spoke at the Digital Book World conference in New York and stated “My win percentage on predicting what Amazon is going to do is very low,” he said in a Q&A with conference chair Mike Shatzkin. “They’re going to do whatever they want to do.” In effect, he is not paying attention to what his primary competition is doing, which is why Kobo has become the dominant number two player in the e-book arena, while Nook continues to lose ground to Apple and Google.
B&N’s revenue for the fiscal year ended April 2016 fell 3.1% compared to fiscal 2015, and the company had a net loss of $24.4 million, those results were about in line with expectations. The company even touted that the eight stores it closed in fiscal 2016 were the fewest closures in 16 years. Nook revenue continues to flounder and there seems to be no clear, concise plan, to remedy the situation.
The Nook hasn’t always been a toxic brand. When their e-readers first burst upon the scene they did some very exciting things. Their first device had a full color touchscreen at the bottom of the e-reader and in a few short years they were generating $220 million a quarter in hardware and e-book sales. Nook was the first mainstream e-reader with a front-light and they were the first ones to issue a waterproof e-reader. Things started to go downhill in 2012 when rising competition from Apple, Google and Kobo begun to erode their market share. The e-book landscape started to get really competitive. It was hard to go a month without some new announcement about a new entrant to the market or a company expanding internationally. In the second quarter of 2012, Nook sales were declining by a staggering 30% a quarter and the loses have continued into 2016.
In 2012 Barnes and Noble had a prospective savior on their hands, Microsoft. The Redmond company invested $300 million to have Barnes and Noble develop an e-reading solution that was supposed to be an integral part of the Windows 8 and Windows 10 strategy. Microsoft needed a great e-book reading app that was supposed to work with PDF files. The goal was to port it over to their Surface Books and Windows Phones. B&N never got around to making the app, but it did have a temporary measure of selling e-books to Europeans. In 2014 Microsoft cut their loses and managed to get back $62 million in cash and has the rest in stock, 2.7 million shares. In 2015 Barnes and Noble shuttered their Windows app and left millions of people without a way to access their paid content.
Barnes and Noble’s glory years are far behind them and it seems like the people in charge simply see it as a job, and not a true calling. What do I mean by this? Kobo CEO Michael Tamblyn, this guy sees e-readers and e-books as a true calling. He speaks at small book fairs to international publishing events, gives interviews to major newspapers, simply put, this guy loves digital reading. Amazon and Apple also have strong leaders who speak at major events, grant exclusive interviews and constantly hype new ways to read and publish .
I wish the people in charge of Nook loved the product and wanted to see it do really well. Barnes and Noble has all of the potential in the world to quickly turn around their digital business. Sadly, they fired all of their really creative people and all they do now is outsource their tablet business to and their e-Reader unit to Netronix. Their software is being designed by people who don’t know a thing about e-readers, since they outsourced it to India.
You know, on second thought, Nook is straight up doomed.
Michael Kozlowski is the Editor in Chief of Good e-Reader. He has been writing about audiobooks and e-readers for the past ten years. His articles have been picked up by major and local news sources and websites such as the CNET, Engadget, Huffington Post and Verge.