Will Focusing On Digital Products Save Or Doom Barnes & Noble?

This past summer, Barnes & Noble announced that they’d be finding a third-party manufacturer for their Nook line of e-readers and tablets. Then their CEO resigned, mostly due to the failure of Nook hardware and content to save the company. The head of the Nook division took charge of the company, and has now officially been named CEO. So what will happen with the Nook now?

The Nook comes in two flavors–an Android tablet with a color screen that has other media and games, and an e-reader that’s easier on the eyes but only serves up books and magazines. The plan that we heard about earlier this year to continue designing, manufacturing the e-readers itself, but partner with another company if they continue making the Nook Color tablets.

In an interview with the Wall Street Journal, new CEO Michael Huseby pinned the company’s future back on the Nook in all of its varieties. “Your best chance of success for selling digital content is on your own dedicated devices which have your brand or a co-brand on them,” he explained.

The retail and college textbook businesses are fine, but print sales overall are declining, and will continue to do so. Reporting its fourth-quarter revenue, including the always-important holiday period, the company

Nook sales were down 61% during the holiday selling season to deep discounts, and online and retail store sales were down 6.6%. The good news? The company wasn’t stuck with a bunch of Nooks, like they were at the end of the 2012 holiday season. In a statement, Huseby explained that the company was still selling through that stock of perfectly good devices this holiday season, which explained why sales fell so much.

Can Barnes & Noble keep going with its plan to go digital? Businessweek’s Brad Stone points out that an unintended consequence of the federal price-fixing lawsuit against Apple and major publishers was that Amazon is now free to set whatever prices it likes without publisher constraints, significantly undercutting competitors like, for example, Barnes & Noble.

Barnes & Noble Holiday Sales Decline as Nook Revenue Shrinks [Bloomberg]
New Barnes CEO Must Tackle Nook [Wall Street Journal]

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  1. JoeBlow says:

    Doom, next question.

    All the digital products will do is attempt to cannibalize what share of their customers Amazon hasn’t already gotten, and as a former B&N customer, Amazon’s going to do it better.