B&N's Bad News On Books And Nooks

An AP photo that moved “over the wire,” as we used to say, on New Year’s Eve showed workers removing the Borders signage from the site in downtown Ann Arbor, Mich., where the defunct bookseller began in 1971. The building's owners are donating the letters to the Book Industry Charitable Foundation for use in raising funds, the caption tells us. 

Barnes & Noble’s hope that its Nook Media division will help keep its ampersand out of the BICF’s dead-letter collection took a hit over the holiday season as the unit announced yesterday that it “sold fewer e-readers and tablets at its own stores, and its e-books sales growth slowed, raising questions about the future of its digital business,” as Reuters reports



The Nook, “often touted as the future growth story for the brick-and-mortar bookseller, is on track to lose an adjusted $733 million over a three-year period, if estimates hold up,” according to the Wall Street Journal’s John Kell, as quoted by “Corporate Intelligence” blogger Tom Gara. 

“The numbers were all the more disappointing given that in late November, Barnes & Noble had told investors Nook device sales doubled over the Black Friday weekend,” writes Reuters’ Phil Wahba, suggesting that the rest of the holiday selling season sales were a “debacle.”

In a release announcing sales for the nine-week holiday period ending Dec. 29, the company also reports “core comparable store sales, which exclude sales of Nook products, decreased 3.1% as compared to the prior year due to lower bookstore traffic.” The company will report full second quarter results on or about Feb. 19, but analysts are not optimistic.

“They are not selling the devices, they are not selling books and traffic is down,” Mike Shatzkin, founder and CEO of Idea Logical, a consultant to publishers, tells the New York Times’ Leslie Kaufman. “I’m looking for an optimistic sign and not seeing one. It is concerning.” 

Kaufman’s piece focuses on the difficulties the Nook Media division faces, pointing out that it has neither the deep pockets nor the rich content offering of its chief rivals, Apple and Amazon. But “the declining retail numbers were also troubling when viewed in the context of a rise in sales among independent booksellers,” Kaufman writes. “The American Booksellers Association, which has not yet released official holiday sales, estimated Thursday that its members’ sales would be up about 8% over last year.”

For its part, Barnes & Noble CEO William Lynch says, “We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward.”

“These results came after the company released two new versions of the Nook tablet for the holidays, including a larger version similar to the size of Apple’s iPad with the goal of luring consumers with a cheaper price point,” Bloomberg’s Matt Townsend reports

The reviews for both devices have been positive, Adrian Kingsley-Hughes points out on ZDNet, but besides its chief competitors, “the market is being further eroded by tablets from the likes of Samsung, and even Microsoft.”

“Amazon Is Gutting Barnes & Noble” reads the hed above Tero Kuittinen’s post on the BGR. “As a Nook owner, I am now starting to get that queasy Betamax feeling; Nook volumes actually declined year-on-year.” Writing that “it is now clear that Barnes & Noble is about to be demolished by Amazon,” Kuittinen points that it would be futile for B&N to cut e-book and tablet prices sharply because it would surely lose the price war against Amazon.

“It’s a pretty pickle,” he concludes. “Damn, I should have jumped into the Kindle camp two years ago.”

Presumably he’s talking about the Kindle Fire tablet, not the original dedicated e-readers that are perfectly fine for wading through Moby Dick but don’t offer the likes of “over 23 million movies, TV shows, songs, magazines, books, audiobooks, and popular apps and games such as Facebook, Netflix, Twitter, HBO GO, Pandora, and Angry Birds Space; ultra-fast web browsing over built-in Wi-Fi and integrated support for Facebook, Twitter, Gmail, Hotmail, Yahoo! and more.…”

The fact is that dedicated e-readers themselves may be headed toward the digital remainder shelf. 

“The e-reader era just arrived, but now it may be ending,” Greg Bensinger tells us in the Wall Street Journal, citing different but similar data from two market researchers. “Dedicated devices for reading e-books have been a hot category for the past half-dozen years, but the shrinking sizes and falling prices of full-featured tablet computers are raising questions about the fate of reading-only gadgets.…”

Good thing all this market disruption is finally getting sorted out, right? Not. 

1 comment about "B&N's Bad News On Books And Nooks".
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  1. Paul Scivetti from Synergen, Inc, January 4, 2013 at 10:52 a.m.

    This is sad and a bit concerning. My wife had a Kindle (dedicated reader, not the Kindle Fire) and HATED it. The device was mediocre and the Amazon service was not so good. She switched to a Nook color and is loving it (both the device and the B&N service).

    One note before we all write off the Nook...sounds like holiday sales in general had a really strong start and then fizzled a bit. So let's take the sales news in a bit of context.

    IMHO, B&N can still make a ton of money in this segment by selling their Nook APP and their e-books. B&N understands people who like to read books and they make it easy for them. Heck, my mother-in-law uses a Nook without any help - and that says something because she isn't all that comfortable with technology.

    Frankly, getting out of the device market might prove to be more profitable in the end...once a book is in e-format, the incremental cost of an additional sale is basically $0 whereas the devices tend to be loss leaders.

    I truly hope B&N figures out how to be profitable in the e-space. They are a great asset and it would be sad to see them go the way of Borders.

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