Despite rising tablet competition and declining interest in e-readers, company still plans to offer innovative e-readers
Barnes and Noble is releasing a new Nook GlowLight e-book reader for the holiday season, while considering the company’s future in the tablet business. Research firm IDC recently said that the electronic-book readers market has become less popular because of the rise of tablets offering video, email, Facebook, and games, in addition to electronic reader capabilities. However, regardless of this news, the company has announced it will be focusing on a new e-reader this year. Jonathan Shar, general manager for emerging digital content at Barnes & Noble says that e-readers are still popular for long-form reading, regardless of the rising demand for tablets.
Barnes & Noble has faced slower digital sales recently because of competition from Amazon’s Kindle Fire and Apple’s iPad, among others. In Q4’12, Barnes & Noble held a 2 percent share of the worldwide tablet market, however it didn’t maintain its place on IDC’s top 5 list this year. Since early summer, the Nook’s future has been uncertain, following losses in the Nook division for the fourth quarter and full fiscal year. For the quarter, Nook revenues dropped by 34 percent to $108 million, and for fiscal 2013, Nook revenues declined by 16.8 percent to $776 million.
Bookseller To Discontinue Nook Tablets
However, with the sudden departure of Barnes & Noble CEO, William Lynch, the company began reconsidering its Nook strategy. COO for the Nook Media business, Mahesh Veerina, said in an interview that the book company will be focusing on a device that enhances the reading experience, rather than developing an all-purpose device. He says, “We don’t want to play in this general tablet market and compete with everybody.” The company will continue to sell off its existing inventory of the Nook HD and Nook tablets, however the company will only be focusing on making further innovations to the e-readers.
For example, in creating the newest Nook, the company added certain features based partly upon customer feedback to make it a more competitive item on the market. The newest Nook is being sold online and in retail stores for $119, the same as the standard model of Amazon’s Kindle Paperwhite reader. However, the Nook is also ad-free, unlike Amazon Kindle, which requires users to pay an additional $20 to eliminate the ads. Similarly, customer feedback led to a brighter screen and certain physical adjustments to make the e-reader easier to handle and more aesthetically pleasing. The Nook also offers customers the option of buying books through other stores that use the EPub standard, including Apple’s iBookstore, while Amazon only allows users to purchase books from Amazon’s bookstore.
Company Reviewing Strategic Plans
Beyond the e-reader business, there have been questions about the future of the bookseller since the resignation of its CEO in July. To date, the company has not appointed a successor, which has led to concerns that Barnes & Noble could be in danger of ending up like its former competitor, Borders. While experts say Barnes & Noble is in no imminent danger of closing like Borders, analyst Michael Norris does say if Barnes & Noble “can’t find a leader who can bring both [the physical bookstore and e-book] businesses together, then it will be more like Borders.”
In the meantime, experts have varying ideas about the possible options for the bookseller’s future. Carol Fitzgerald, founder of BookReporter.com, says Barnes & Noble “needs to quickly examine what the consumer really wants in stores…It has the space to create ‘shops’ in its stores for readers — book group shops, YA (Young Adult) shops…The warehouse approach needs to be redefined to be something fun.” Fitzgerald’s approach would work to enhance the physical shopping experience for customers in an in-store setting. However, Mike Shatzin, founder of the Idea Logical Company, takes into account the rising need for digital and retailers’ needs to adjust business accordingly. He says, “Adjusting to a book world that is less printed and more digital and far less in shops and far more online” is the primary challenge for Barnes & Noble in the future.