Is the Barnes and Noble Nook an Endangered Species?

Nook Shop

So the big news yesterday is that things are not going well for Barnes and Noble. They reported weak holiday sales and it’s not just hardcovers and paperbacks that aren’t selling well, it’s Nook devices and Nook ebooks.

In fact Nook revenues fell 12.6% from last year’s holiday sales period. As if that’s not bad enough, overall sales at B&N bookstores and online went down by 10.9% from last Christmas. The most concerning thing about those numbers is that the Nook actually did worse than the rest of B&N’s business.

Sales of Nook ebooks and other digital content rose by 13.1% over the holidays, but that doesn’t sound nearly as impressive when compared to the 113% gain during the 2011 holiday season.

The sad fact is Barnes and Noble is slowly killing their Nook brand by mismanaging product releases, severely limiting their customer base, under-delivering on content (especially apps and videos), and the worst of it is the locked-down nature of B&N’s ecosystem.

Nook apps only work on Nook devices, and Nook ebooks only work with Nook apps and Nook hardware. The people in charge at B&N think their products are so great that they want to lock customers into buying content solely from them. That might not be a bad approach if they actually had the content to pull it off, but that’s far from the case. Their selection of Nook videos contains less titles than a typical nerd’s collection of sci-fi videos.

The Nook Appstore is painfully lacking to the point it’s hard to qualify their devices as tablets sometimes, more like half-tablets when compared to the competition. All B&N has to do is let people sideload apps from other sources like virtually every other current Android tablet on the market allows, including Amazon’s Kindle Fire tablets, but instead B&N chooses to lock the gates from the outside world and force people to conform to the small little world they’ve created and then neglected.

It’s not the price or the hardware that’s hurting the Nook as much as the restrictive software and limited content. In fact the hardware and prices are quite good compared to the competition, which makes the slower growth in sales even more concerning.

Barnes and Noble better pull things together this year or they are going to end up like Borders, and the Nook is going to end up on the endangered species list. B&N has had a couple of investors throw money their way, but if they continue to run the Nook business into the ground the way they’ve been doing it’s not going to matter.

Like I mentioned in an earlier article, if I were in charge of the Nook department things would be a lot different. Ebooks wouldn’t have special B&N DRM that limits them to only Nook devices and apps, sideloading Android apps would be an option on Nook tablets, and international expansion would be a priority.

16 Responses to “Is the Barnes and Noble Nook an Endangered Species?”

  1. I suspect you are right on about side loading apps on the Nook tablets. Unless B&N can expand their eco system incredibly rapidly, it is a dead end as merely a content delivery vehicle for B&N content.

    I think they made a big mistake in not having a new e-ink device for Christmas. While the NST (with and without the light) is still a solid reader, it is not going to make anyone drop their current reader to get it at this point. They should have released an HD version. They can do later in the year, but they won’t get nearly the Christmas bump.

    I suspect the 13% growth in ebook sales is a reflection that the market is much more mature than it was a year ago. Without knowing what Amazon saw in U.S.A. ebook sales, it is impossible to know if this is a warning sign for B&N or just a piece of data.

  2. I’m Canadian with a Nook Simple Touch. Since I don’t have a credit card with a US address, B&N won’t even sell to me! I have not bought any content from B&N because they won’t take my money.

    Actually, that doesn’t matter at all to me. The Nook is a great piece of hardware and interacts wonderfully with Calibre (on Linux) so I can content from anywhere, convert it to ePub and load it on my Nook.

    B&N may have intended the Nook to be a content delivery device for their locked-down content. Instead, they’ve made themselves irrelevant for content acquisition. But they have provided a superb e-reader.


    • Rob, use Barnes and noble gift cards. if you know someone in the states, have them send you some if Canada doesn’t have them. you can register them and purchased will come from them. another option is a prepaid Visa and perhaps use someone’s address in the states-say, the White House?

      • Well, it’s not impossible to buy books from B&N, but definitely it’s too complicated. Since my Nook is rooted, I solved the problem simply by installing the Kindle app and buying books from Amazon.

  3. Nathan,

    All these points are very valid. I would also add one more. The lack of introducing a “HD” (1024×768, which is not really HD, but whatever) eInk device put B&N behind in the “WOW” factor when it comes to Christmas sales.

    • Barnes & Noble decided that they would stick to a summer schedule for releasing eReaders, which isn’t that smart considering that all of the attention comes around Amazon’s release in September, closer to the holidays. The Nook with Glowlight is in need of an update, as is the Nook Simple Touch, but I doubt we will see another generation of that again.

  4. The nook tablets just aren’t good enough. The strongest thing B&N has is the e-reader. Really inexpensive, and my favorite design of all e-ink displays. They just got to fix their lighting (though, in retrospect, Amazon’s release is fairing far worse in this respect).

  5. The side loading of apps is a minor thing. We saw that the ability to hack a device does not translate to sales. If that was the case the Nook Color should have over shadowed all other devices but the fact that B&N is limited in distribution and name has been the hurt more than anything else.

    I disagree that the limited apps can be solved by installing the apks yourself as I doubt many people do that on the fire vs the people who buy it and just use the Amazon app store.

    The use of a proprietary DRM scheme is a losing battle, they need to offer more by just using the standard ones that Sony, Google and Kobo use. I am not sure how much work will be needed to do that but that would do wonders.

    What I want to see from them is a steady investment on improving the software of the device, have milestones and a schedule for updates and make them all meaningful. They should hire some interns from schools with support of more senior programmers for support of older devices so they are not just left behind. I get the idea that they have limited resources and that is why they dumped the Tablet and Color models since they cannot offer the support for them.

    • I think that the hackability could have become a very strong selling point if B&N had advertised it to distinguish the Nook line from competitors, and supported/celebrated the community’s efforts. That might not be the case for the Nook Color/Tablet (I don’t own either, so I have no idea), but they could have easily differentiated the Nook Touch from the crowd by showing off things like the fast refresh enabler.

      In terms of available apps, it really depends on what the individual wants to do with the device. If B&N were to highlight the ability to sideload apps that they didn’t offer and demonstrated how easy it is, it would go a long way towards enticing customers that otherwise will either be unaware or think it’s over their head.

  6. i have owned the original nook, the simple touch, nook color, nook tablet, and nook HD. i also have nearly every conceivable tablet with nook apps. my take is this: it took nook a long time to make borrowing library ebooks a simple process. And, the major thing is the lack of free/reduced price content. there are many sites which offer tons of free/strongly discounted books for kindle. i have a basic kindle because i have about 800 books which have been free or near-free. i subscribe to the sites via Facebook, and also have the offers sent once a day in email. I choose each day from a very diverse selection of books. the point is that Amazon has many good books available with people running sites and posting the kindle books. amazon also offers a different paid app for free every day. I’ve sworn by nook. i have at least 1000 nook books. but they are horrible at marketing. they don’t know that little freebies draw customers to their site where they may linger and purchase more.

  7. I don’t have a Nook HD, but they seem like good devices. IMHO better than the Kindles by virtue of having a memory card slot and being rootable with N2A cards.

    My guess as to why the Nooks aren’t selling well is because consumers know that an unrooted Nook is tied to a weak B&N ecosystem (overpriced ebooks, minimal videos).

    Maybe the Nook can go the way of the Kobo. Kobo was linked to Borders, but when Borders went belly-up, Kobo continued on. If the Nook spins off as a separate company and doffs its ties with B&N, it may survive even if B&N closes shop at the end of 2013.

    • “… If the Nook spins off as a separate company and doffs its ties with B&N …”

      Nook is already spun off and completely dropping ties with B&N offers little strategic value add.

      The spin off was complete in October

      and extended a couple of weeks ago.

      Trying to spin Nook out as an IPO would likely fall flat. Detached and solely independent of deeper pockets competing head-to-head with Samsung , Apple, Asus, and the hordes of cheap Chinese clone tablets they’d get crushed.

      What is more lacking is not looser ties to B&N but closer ties to other retail outlets in locations they are currently weak in.

      Trying to take on Apple/Samsung/Asus (tablets) , Apple/Netflix/Vudu(Walmart)/Hulu (video ), *and* Amazon/Kobo/etc ( ebooks) all at the same time as a small independent company is more doomed than B&N as it currently stands.

  8. B&N has great hardware, but their strategy is killing them. You can not be the underdog in the ereader/tablet race and expect to successfully compete having less flexible hardware, smaller media and app stores, and prices that are the same as the competition. There has to be some reason for people to switch to your platform besides a nice screen.

    A rooted nookHD is a great device, B&N just needs to have more of that greatness out of the box if they want to compete.

  9. I agree with the comments about the restrictive nature of the Nook Color. I bought one last year and rooted it using N2A card to make it more useful. It is okay as a tablet but a little clunky therefore this year I received a Kindle Fire HD at Christmas. What a difference! The Amazon ecosystem and sideloading are key. I doubt if I will ever use the Nook again.

  10. Rob from Canada,

    Put a US. address in your B&N account (use the address of a B&N store) for your billing address and you will be able to buy whatever your like. Remove any mention of a Canadian addres.

    Many, many, many B&N Canadian customers do this and have no problems.

    Their system will not check your credit card address versus your B&N address.

  11. Endangered species isn’t so much the issue as differentiated species. Trying to ape everything their competitors are doing (mimic other species exactly) is actually more of a problem IMHO.

    If Nook truly focused on better reading experience that would be different than small overtures to being a generic tablet vendor. For example, EPUB3 and deep internationalization support so that can work with any book in any language would be more focused on reading than breadth.

    “.. Nook ebooks only work with Nook apps and Nook hardware. …”

    That’s not really a blocking issue if the apps span all widely distributed platforms. If can read the book on Windows 7 , Windows RT/8, Windows Phone , iOS , OS X, Blackberry , Android , and Chrome what exactly is the problem with mainstream access? Amazon isn’t hurting with the exact same strategy.

    DRM is more a publisher call than a Nook call. There are DRM free books in the Nook store.

    ” … Nook apps only work on Nook devices, … ”

    The problem here is more so whether the Nook app curation process is adding significant value or not.

    If it is primarily a mechanism so that Nook (B&N) can tax app vendors’ revenue then it is highly dubious. App Stores are largely in a race to the bottom. There is almost zero value if most apps are free and make money off of pilfering user info and hawking ads (that don’t source through B&N).

    Working closely with 50 quality vendors on a finite number of non-race-to-the-bottom apps could be a more focused and differentiating curation.

    Right now it is more so forcing folks into recompile and some low value-added validations.

    Going general Android Play or trivial sideload is a waste of time. If all folks are highly motivated on is affordable Android tablet then Nook is going to get run over by the hardware oriented vendors. There is a general Android Nook app. If that app is not hamstrung then folks with mainstream Android can get to Nook content.