A new report from the New York Times suggests that Barnes and Noble might be abandoning the Nook platform. These reports came about after Barnes and Noble warned their latest financial report for the last quarter due to be released on Thursday shows yet another loss for the Nook Media division, while also failing to hit its revenue projections.
The fact the company is posting a loss is not the issue, especially when you consider Amazon has been able to shrug off losses due to every increasing sales. The problem is more to do with the future of the company because repeated losses in the Nook division that Barnes and Noble invested heavily in for the past couple of years is a dead-end.
If Barnes and Noble do axe the Nook, it would be a significant shift in strategy, as they do a 180-degree from their investments in the media division, which was seen as the future of the company due to the decreasing popularity of bookstores and books that resulted from the rise of eBooks and tablets. While the Nook as a concept was sound, the problem was the competition they faced in the market with many high-end devices from multiple manufacturers with little difference between them when it comes to hardware and price.
An individual familiar with the Barnes and Noble strategy acknowledges that the losses this quarter that includes the holiday season has caused the high level executives at Barnes and Noble to rethink their strategy, with a move away from designing, engineering and building their own tablets and e-readers and focus more on licensing their content to other device manufacturers. The idea is similar to that of Amazon, who sell their Kindle’s at a loss, and make their money back through sales of digital content, but instead Barnes and Noble will circumvent the R&D and low margins of selling budget devices and skip straight to the profits from digital distribution.
On Thursday, Barnes and Noble is expected to announce their commitment to intensify their partnership with other companies such as Microsoft and Samsung, as a means of reaching a larger audience, since Barnes and Noble has been proclaiming itself as the ‘world’s largest bookstore’, the content it’s able to license will bring a steady revenue stream.