The Nook is supposed to help usher in Barnes & Noble (BKS) in the future. It does not look that way. Today, the president of the book chain and the biggest shareholder, Leonard Riggio said in a regulatory filing that he is interested in buying the company’s stores and Web site, but not the e-reader business.
Riggio, and many others, had been hoping that Barnes & Noble could rival, if not surpass his rival and one of Amazon (AMZN) Kindle and Apple (AAPL) iPad. The belief that Barnes & Noble could make the transition to the digital age, and then thrive on it, was one of the reasons Riggio was able to hold off the billionaire activist investor Ron Burkle in 2010. The following year, the company introduced a new black and white e-reader, the Nook brand new, designed by Robert Brunner, who had worked at Apple. Both Microsoft (MSFT) and Pearson (PSO) had minority stakes in Press corner in the last year.
In January 2012, William Lynch, CEO of the parent company, said: “We have a NOOK business that’s growing rapidly year after year and should be approximately $ 1.5 billion in comparable sales this fiscal year. Among the continuing growth designed in the U.S., and the opportunity for NOOK internationally in the next 12 months, we expect the business to continue to scale rapidly for the foreseeable future. ”
But as the attention of computer companies and consumers has become a full-featured tablet, Barnes & Noble has struggled to catch up with rivals over pockets. It competes in the market with the Nook and Nook Color Tablet, devices with 7-inch screens that both versions within (GOOG) Android operating system from Google. And the game is not a device; it is about building a global ecosystem of services and applications. Barnes & Noble just does not have all the assets needed to build something like that, Amazon, Apple and Google do obviously. The bookseller also has spilled into the front-readable, as Amazon built a catalog of titles exclusive to the Kindle with its different divisions publishers and e-book lending library, which is available for free to members its delivery service Greenwich.
Barnes & Noble is now in a battle he can not hope to win. Companies like Apple, Google, Amazon and Microsoft are competing for a position in the tablet market growing fast. Amazon is selling the Kindle Fire at cost devices; Google may soon open stores to showcase its growing range of hardware, including its Nexus 7 tablets. Microsoft is spending millions of dollars to market its tablet surface. And with the iPad Mini, Apple has recovered quickly from the market yield of small, 7-inch tablets.
Not surprisingly, given the competition fades, the momentum has slowed Nook. The division had sales of $ 160 million in the quarter ended in October. The company reports earnings on Feb. 28.
So what is the future of the Nook in this hypercompetitive environment? With the drop in revenue and same-store sales, the retailer can not make the kind of investments necessary to compete with the big boys. If the Nook division remained outside, as the company has always provided, perhaps one of the devices-Microsoft-wealthy investors will double to take more control, change the Android operating system in Windows 8, and then use it to trying to make inroads into the tablet market. It is difficult to imagine any other scenario where the Nook is still alive.
There is much irony to go around here. A decade ago, Microsoft was a pioneer in the tablet market with pen-enabled Windows touchscreens. But Microsoft did not quite get it right and the tablet market did not take off until the iPad. Similarly, back in the 1990s, Barnes & Noble sold one of the first mainstream e-readers, the Rocket eBook. When that did not sell, the first efforts Riggios close their e-reading and then were caught unaware by the introduction of the Kindle in 2007. In a sense, owning the brand Microsoft Nook provide perfect synchrony and two endangered brands of hand amid surprising possibilities and a market that is moving inexorably away from them.