B&N to stop making Nook Tablets. Lessons for Kindle Fire HD, Amazon

B&N announced its Q4 results and there’s a lot to take in. The big decision is that B&N will stop making Nook Tablets itself, and move to a partner-centric model. This is similar to what Google does – Asus makes Nexus 7 Tablets and they go out with the ‘Google Nexus 7′ branding (Asus branding too, but that’s secondary).

Some of the key details, courtesy TechCrunch’s rather pessimistic coverage of Nook Tablets & B&N’s moves -

  1. B&N reported $118.6 million losses on revenue of $1.3 billion in Q4, 2013.
  2. $6.8 billion in revenue for Fiscal 2013. Loss of $154.8 million for Fiscal 2013.
  3. Nook Media had just $108 million in quarterly revenue.
  4. For the fiscal year 2013, Nook Media had $778 million in revenue. This is down 16.8% from fiscal year 2012.
  5. Nook HD and Nook HD+ will be around until end of 2013. They will remain at their low $129 and $149 prices.
  6. B&N will keeping making eInk eReaders. That’s good news. Kindle needs the competition.
  7. B&N will open up to tablet makers and let them make ‘Nook’ branded Tablets. Not sure which companies would be interested. Probably Microsoft. Perhaps even Asus and Acer to see if they can tap into the 5 million to 10 million existing market of Nook Tablet owners.
  8. Nook division revenues dropped 34%.
  9. Nook content sales dropped 8.9%. That suggests that content sales would have actually increased if Tablet sales hadn’t fallen so much.

B&N’s Press Release has some details on losses and revenues and such. Also some interesting tables showing how fast the Nook division is falling.

What people are saying about B&N stopping Nook Tablets

Peter Kafka at All Things Digital says this about B&N stopping making Nook Tablets -

Just a few years ago, no one thought the bookseller had any business trying to produce its own e-reader. And then, for a brief period, they looked like they were going to prove the doubters wrong, and showed that an old-line retailer could compete with the world’s most sophisticated consumer electronics companies.

Nice run while it lasted.

My thoughts exactly. There’s nothing wrong with giving it your best shot and failing. It’s hard to compete against Apple and Google and Samsung and Amazon. It’s interesting that the big slump in Nook sales started around the time the iPad Mini and the Kindle Fire HD were launched. Wonder which one out of the two had more impact on Nook.

MemeBurn points out B&N’s strategy, as outlined in its press release, and it’s quite interesting -

“Going forward, the company intends to continue to design eReading devices and reading platforms, while creating a partnership model for manufacturing in the competitive color tablet market. Thus, the widely popular lines of Simple Touch™ and Glowlight™ products will continue to be developed in-house, and the company’s tablet line will be co-branded with yet to be announced third-party manufacturers of consumer electronics products.

Paid Content has a good overall article, discussing lots of facets of B&N’s Nook Business and its future plans.

What does this mean for Amazon?

Well, it’s somewhat good news.

  1. Nook Tablets might not be selling much but at least some of those sales will shift to Kindle Fire HD now.
  2. This increases the chances that Nook eReaders will die out in the next few years. That would be a big win for Kindle.
  3. This makes Nook Reading Apps less attractive. Since there’s no ‘Reading Tablet’ from Nook. People will choose Kindle Reading Apps instead, usually.
  4. Companies that manufacture ‘Nook’ Tablets will probably not promote Nook Reading Apps as strongly as B&N did.
  5. This might even weaken B&N itself and lead to its demise in 10-15 years. That would mean more book sales and more ebook sales for Amazon.

Basically, it strengthens Amazon as the #1 eReader and eBook seller. It also increases the chances that Kindle Fire HD can be the #2 or #3 Tablet in the Tablet Market.

In the long-term, it might strengthen Amazon as the #1 book and ebook seller greatly – especially if B&N dies.

Lessons for Amazon

Quite a few, actually.

  1. If Kindle Fire HD 2 isn’t very good, then it might suffer the same fate as Nook HD. Even if Kindle Fire HD 2 is very good, it might get killed if iPad Mini 2 and the new Windows 8 Tablets are superb.
  2. It’s good to stick to your core competency. If you venture outside your core competency, there’s a higher chance than usual of failing. As Amazon goes into Kindle Phone and Kindle Watch and other products, it should be careful not to spread itself out too thin. Most importantly, it needs to figure out what its core competencies are, and stick to those.
  3. Kindle Fire HD needs a better app store. Amazon decided to build its own app store. However, it’s still a long way behind Apple’s App Store and also quite a bit behind Google’s App Store. Two of the major reasons B&N’s rather well made Nook tablets died were – lack of marketing, lack of apps. Amazon doesn’t have the first problem (at least not in the US) but it certainly has a problem on the app store front. Amazon already failed to make an app store work once (with the Kindle App Store). It’s fixing some of its mistakes (like its crazy stipulation that it wanted pricing control over apps) with the Kindle Fire App Store. However, it’s not Amazon’s core competency and it’s a long way behind.
  4. The #4 player in a market will usually get crushed. Kindle Fire HD is currently at #2 or #3 after Apple and perhaps Samsung. If Windows 8 Tablets and/or Nexus 7 push ahead of Amazon, or if Apple and Samsung improve their tablets greatly, then Amazon might be left behind as a weak #3 or a weaker #4. Then it’d be curtains for the Kindle Fire HD within a year or two.
  5. Profits and Assets are important. Amazon has been making the mistake of not building up profit streams, just cash flow streams. It’s also been slow in building up assets. What does that mean? A few bad quarters in something like Kindle Fire HD or Kindle Phone and it would be forced to kill those businesses. A lot of Amazon’s business model is based on taking current losses for future profits and/or future revenue streams. That works best if you have some existing profit streams you can offset those losses against.

It should actually be a very sobering lesson for Amazon of what is at stake. If Amazon doesn’t deliver a very strong Kindle Fire HD 2, then it would be the end of Kindle Fire HD and Amazon’s Tablet business. A lot is at stake with the next Kindle and the next Kindle Fire HD. Will Amazon deliver?

Curtains for Nook HD? Nook HD Fire Sale extended

We’ve talked about the crazy Nook HD sale and reasons why Nook HD might be on sale in the recent past.

Now, B&N has ‘extended’ it beyond Father’s Day – conclusively proving it’s a fire sale to clear out stock, and not some ‘super special Father’s Day sale’.

B&N’s Press Release about the Nook HD Fire Sale is pretty interesting, especially this paragraph -

“With the fantastic success of our Father’s Day promotion, we decided to extend the great prices on NOOK HD and NOOK HD+ to help our customers gear up for a great summer reading season,” said Jamie Iannone, President of NOOK Media. “In our stores and online, customers have embraced these beautifully designed, lightweight devices with stunning displays that offer great reading and entertainment content.  We’re thrilled to keep in place our best prices ever and deliver great value to make reading more affordable.”

Well, good for them if they are seeing a great reaction. It certainly helps them clear out all the unsold stock they presumably had from their disastrous Holiday 2012 season.

It’s painfully obvious now that B&N is ending Nook HD (and perhaps replacing it with something else? perhaps not)

There were two possibilities we discussed -

  1. B&N is ending Nook HD Tablets completely and leaving the Tablet space.
  2. B&N is switching over to Windows 8 Tablets and clearing out stock of Android based Nook HDs.

The former seems likelier. However, one of the two is definitely happening, based on the extension of the crazy Father’s Day fire sale on Nook HD and Nook HD+.

At Paid Content, Laura Owen has this to say about the Nook HD fire sale extension -

combine the price cuts with the multiplerumors that Barnes & Noble plans to phase out the Nook tablet line by the end of fiscal year 2014 (which would be a year from now) and it starts to look as if B&N is trying to clear out stock. (The company has already phased out the lower-end Nook Tablet and Nook Color.) We may get more answers from the company’s next earnings report, which comes out June 25.

Well, yes, it was apparent that B&N was clearing stock once it started doing weekly sales on Nook HD and Nook HD+. This pretty much confirms it.

WebProNews thinks B&N should see how Nook HD and Nook HD+ sell at the new lower prices before deciding to leave the hardware market. I would agree. B&N needs to figure out the exact reasons its comparably good hardware lost so badly to iPad Mini and Kindle Fire HD. If it can fix those issues (Google Play is a good first step), then it should consider staying and fighting in the Tablet Space.

Another possible reason for Nook HD not selling well is that Apple and Amazon have huge customer bases and huge marketing budgets. B&N hardly advertised the Nook HD and Nook HD+. When it did, it focused too much on the Julie prototype – a mother with two young kids and a husband. That sounds good in theory. In actual practice, we probably have a lot more single mothers and unwed people and teenagers and older couples and boomers interested in tablets than the fairy tale ‘perfect couple in their 30s’ with two young kids. I wouldn’t be surprised if the percentage of prospective Tablet owners that fit the ‘Julie’ prototype is less than 20%. B&N was alienating 80% of its market by focusing so strongly on kids’ books and kids’ apps and ads focused on perfect little 2+2 families.

Here’s what B&N is sending out in emails -

Great news! Due to popular demand, we will be extending our amazing offer for our NOOK HD Tablets.

NOOK HD+ Tablet Only $149 – savings of $120 off regular price!
NOOK HD Tablet Only $129 – Savings of up to $80 off regular price!

Got to love it. Nook HD at $129 indefinitely. Perhaps it forces Amazon to drop prices on the Kindle Fire HD.

Is Nook leaving PC and Mac to Kindle?

Courtesy of The Digital Reader (also covered by TechCrunch), we get the surprising news that B&N has stopped supporting its Nook for PC and Nook for Mac Reading Apps.

  1. B&N has ended support for Nook for PC and instead expects users to use Nook for Windows 8 and Nook for Web.
  2. B&N has ended support for Nook for Mac and instead expects users to use iPhone and iPad Apps and Nook for Web.

There are a few problems with this approach.

Nook for Windows 8 doesn’t cover Nook for PC, neither does Nook for Web

Windows 8 penetration is in single digits. The overwhelming majority of PC users are on Windows 7, Windows Vista, and Windows XP. All those Windows 8 licenses sold are mostly just that – licenses. They aren’t yet actual machines running Windows 8.

This means that B&N has told the 90% or so of PC users using Windows 7, Windows Vista, and Windows XP to forget Nook.

What about Nook for Web?

Well, Nook for Web doesn’t support all books. It doesn’t even support most books. This means that users who are on Windows 7, Vista, or XP simply can’t read their books any more – unless they have a Nook device or have a smart phone that has a Nook reading app.

What are all these users going to do?

Switch to Kindle. Perhaps stop buying books from Nook. Perhaps go to Kobo.

Nook for Web doesn’t cover for Nook for Mac, nor do the iPhone Apps

B&N’s decision to end support for Nook for Mac is similarly strange.

Nook for Web doesn’t support a lot of books – so Nook for Mac users can’t just switch to that.

Mac users who don’t have, or don’t want to read on, an iPhone or iPad are stuck.

Again, all these users will switch to Kindle or Kobo.

Is B&N giving up?

That’s the first thing that comes to mind.

Combine all the signs -

  1. Heavy losses from Nook devices for B&N last quarter.
  2. Massive fire sales for Nook HD and HD+ this year.
  3. Ending Nook for PC and Nook for Mac Reading Apps.

It seems that B&N is giving up.

Well, there is one other possibility.

Is B&N cutting off poor performing Apps & Devices?

Perhaps B&N decided to focus on the devices and reading apps that are doing well.

  1. Perhaps that means focusing on Nook for iPhone and Nook for Android and Nook Study. And to cut off Nook for PC and Nook for Mac.
  2. Perhaps it means focusing on Nook eInk eReaders or the next generation of Nook Tablets (perhaps built using Windows 8). Which would mean clearing out stock of Nook HD and Nook HD+.

That is a possibility. It’s certainly better than the alternative i.e. B&N leaving the ebook space completely, or perhaps just giving up.

Strange that B&N is ending Nook for PC and Nook for Mac

There were strong rumors earlier this year that B&N was ending Nook Tablets and would focus on reading apps instead. Those rumors seemed to be validated by the fire sales going on for Nook HD and Nook HD+.

However, the end of the Nook for PC and Nook for Mac reading apps puts us in a quandary.

If B&N is ending Tablets and focusing on reading apps, then why is it ending Nook for PC and Nook for Mac?

  1. Were these performing badly?
  2. Were users on these not buying books?
  3. Were these leading to piracy?
  4. Are there not enough resources to run these well?
  5. Is B&N just leaving ebooks entirely?

It’s hard to say what the reality is.

Why is Nook leaving PC and Mac to Kindle?

The crux is that B&N is leaving all these users to Kindle and Kobo.

Perhaps it’s just 5% or 10% of the market. However, it’s very strange to not even contest it.

Perhaps it’s just 1% or 2% of the market. Perhaps people just don’t read books on desktops and laptops. In that case, it’s understandable.

Would love to know the actual figures for both Kindle for PC/Mac and Nook for PC/Mac. Is it that there just isn’t a market there? Or is B&N running out of resources and/or the will to fight?

Nook HD Fire Sale, Nook HD+ Fire Sale

For Father’s Day, B&N is having a massive Nook HD Fire Sale, and an even bigger Nook HD+ Fire Sale.

  1. Nook HD is now just $129 – That’s $70 cheaper than the original price of $199. It’s also $50 cheaper than the on-sale $179 Kindle Fire HD.
  2. Nook HD+ is now just $149 – That’s $120 cheaper than the original price of $269. It’s also $100 cheaper than the on-sale $249 Kindle Fire HD 8.9″.

These prices are ridiculously low.

For reference, the Nook HD is now around the same price as the Kindle Paperwhite. The Nook HD+ is now the same price as Kindle Paperwhite without Ads.

Is Nook HD a steal at $129?

Yes. Let’s consider what you get -

  1. The 7″ Tablet with the absolute best screen resolution and pixel density.
  2. Both Google Play Store (lots of free apps) and Nook App Store (curated apps optimized for Nook HD).
  3. ePub support.
  4. Option to read Kindle Books or Nook Books or books from any store that has an Android App.
  5. An extremely well-built Tablet.
  6. It’s very light and compact – much more so than Kindle Fire and Kindle Fire HD.
  7. A profiles feature that is very useful for families.
  8. There are downsides – B&N is going to get out of Tablets, there are some conflicts between Google Play Store and Nook App Store, the software is sluggish sometimes. However, these are minor things compared to the benefits.

Overall, Nook HD is a very good tablet even at $199. Perhaps even better than Kindle Fire HD - especially with its addition of the Google Play Store. At $129 it’s an absolute steal.

I’ve owned Nook HD since launch and it’s the best 7″ Tablet. If you’re in the market for a Tablet, I’d strongly recommend trying out the Nook HD. Remember, you can return it in the first 14 or so days if you don’t like it. Also, you can read your Kindle books on it using Kindle for Android App.

Is Nook HD+ a steal at $149?

This is a massive, massive steal. What you get includes -

  1. A high-definition screen with excellent near retina display level pixel density.
  2. A compact device (for a 9″ Tablet) that’s relatively light.
  3. Google Play Store and Nook App Store.
  4. The option to buy and read books from any store that has an Android App.
  5. A device that really is worth $250 to $270 for just $149.
  6. A Profiles feature that lets you set up separate profiles for family members and friends. It also lets you choose what content is available on each profile.
  7. There are downsides – B&N is leaving the Tablet market perhaps, conflicts between the two app stores, the profiles feature can be buggy sometimes, the software can be sluggish sometimes.

I bought the HD+ for $269 and considered that good value for money. At $149 it’s crazy. You’re getting a $250 tablet for $149. It has Google Play Store so you can access your Kindle Store books via the Kindle for Android App.

While Nook HD+ isn’t the best 8″ to 9″ to 10″ Tablet (that is probably iPad Mini), it’s just as good as Kindle Fire HD 8.9″. At $149 it’s a no-brainer if you’re looking for a large screen tablet.

Are Nook HD and Nook HD+ a better choice than Kindle Fire HD and Kindle Fire HD 8.9″?

At these prices yes. The main reasons why Nook HD and Nook HD+ are better choices than Kindle Fire HD and Kindle Fire HD 8.9″ -

  1. They are MUCH cheaper. $129 and $149 are much cheaper than $179 and $249. Nook HD and Nook HD+ are 72% and 60% of the price of Kindle Fire HD and Kindle Fire HD 8.9″.
  2. You get Google Play Store which has 10 times more apps than Kindle Fire App Store, with most apps free and/or cheap. Additionally, most of the big apps come to Google Play Store before they come to Kindle Fire App Store. In the next 1-2 years Google Play Store might even get precedence over iPad App Store.
  3. You can read books on them from ANY store. With Kindle Fire HD and Kindle Fire HD 8.9″ you can sideload apps and get the same effect – However, it isn’t quite as convenient.
  4. Nook HD and HD+ are more compact and easier to hold. The difference between Nook HD+ and Kindle Fire HD 8.9″ is not much. However, Nook HD is considerably more compact than Kindle Fire HD.
  5. Nook HD and HD+ are better built. For reference, my Nook Color from 3 years ago is still going strong.
  6. Nook HD screen is clearly better than Kindle Fire HD screen. Nook HD+ screen is around as good as the Kindle Fire HD 8.9″ screen.
  7. Nook HD and HD+ come with SD Card slots. This is very, very useful with a Tablet. Just a few HD movies can eat up your existing disk space.

Even at full price, before the Google Play Store was added, I’d consider Nook HD better than Kindle Fire HD. Kindle Fire HD 8.9″ was a bit better than Nook HD+.

Now with Google Play Store added, and with the Nook HD Fire Sale and the Nook HD+ Fire Sale, it’s a no-brainer.

Nook HD at $129 and Nook HD+ at $149 are great, great prices. If you’re in the market for a Tablet, do take a look.

Is Kindle Fire HD killing Nook HD? Is it iPad Mini? Nook HD at $125 now

B&N is now offering Nook HD for $125 and Nook HD+ for $145. These are coupons mailed to B&N Members.

Have Kindle Fire HD and iPad Mini hurt Nook HD so badly that, even after adding Google Play Store, B&N still has to sell Nook HD for $125?

For reference, $125 is about the same as the Kindle Paperwhite with Ads ($119).

Is Nook HD really just $125?

Yes, B&N is sending out coupons to B&N members advertising Nook HD at $125 – that’s $74 less than the launch price of $199. It is also offering Nook HD+ at $145 – a massive $124 less than the launch price of $269.

For reference -

  1. Kindle Fire HD is $199.
  2. Kindle Fire HD 8.9″ is $269.
  3. iPad Mini is $329.

Additionally, B&N has already added Google Play Store to the Nook HD and Nook HD+.

It’s pretty much a Fire Sale now.

Why has B&N been forced to drop Nook HD to $125?

Nook Color and Nook Tablet, the two predecessors to Nook HD, were sold for $199 for the first few years after release. The price never even approached $125.

Nook HD is at $125 just 7 months after release.

B&N has already added Google Play Store to Nook HD. That should have led to a boost in sales. However, this latest move i.e. dropping the prices of the Nook HD and Nook HD+ massively, suggests that B&N is either not selling many Nook HDs OR that B&N sees some reason to do a massive stock clear-out.

Let’s consider the possibilities -

  1. Nook HD might not be selling well DESPITE adding Google Play Store.
  2. B&N might have found out that a very good, very competitive iPad Mini 2 or Nexus 7 2 is arriving soon. It might have decided to clear out stock now, while it still can.
  3. B&N might have terrible marketing and awareness. Most people might not even realize this is a good option.
  4. B&N might have found out that Amazon has something really massive lined up for Kindle Fire HD 2. It might have no option other than to clear stock quickly before Kindle Fire HD 2 arrives.
  5. Nook HD might have sold really, really badly during the last holiday season. Which would mean that even if adding Google Play Store increased sales, B&N still has a lot of stock left. This would force it to keep driving prices lower to try and clear Nook HD stock.
  6. B&N might be switching to Windows 8 Tablets. It might be clearing out stock of Nook HD and Nook HD+ to prepare for this change. Google Play Store might be a parting gift to existing Nook HD and Nook HD+ owners.
  7. B&N might have seen that people buying the Nook HD with Google Play Store are STILL buying books and movies from B&N and still earning B&N money. It might have decided to go all-out in gathering up recurring customers.
  8. Perhaps B&N was overly optimistic and/or didn’t plan for an iPad Mini when ordering Nook HD and Nook HD+. Perhaps it has enough units left that it needs to sell a few million of them.

It would be really interesting to get some insight into exactly why B&N has dropped the Nook HD to a ridiculously low $125.

Why is Nook HD facing such hard times?

Perhaps I’m missing something. I don’t understand how we have -

  1. $199 Kindle Fire HD expanding to 170 countries.
  2. Nook HD at $125, which is a comparable Tablet, doing terribly. How could it be doing terribly even after adding Google Play Store?

Is Amazon selling a lot of Kindle Fire HDs? Why is it not running any sales? Did Amazon do a much better job of anticipating sales correctly?

Did B&N make some fundamental mistakes that stalled sales?

It’s not clear why two comparable devices would diverge so wildly in success.

It would be interesting to know what you think the reasons are for Nook HD being on a fire sale while Kindle Fire HD seems to be on fire.

What impact will a $125 Nook HD have on Kindle Fire HD?

It’s hard to say.

Obviously, addition of the Google Play Store doesn’t seem to have done enough for Nook HD sales.

What impact did Nook HD adding Google Play Store have on Kindle Fire HD Sales? It must have slowed sales at least a bit.

What impact will the new $125 Nook HD have on Kindle Fire HD sales? Surely, a $125 Nook HD with Google Play seems more attractive than a $199 Kindle Fire HD with no Google Play?

Are we missing something here? Why is B&N dropping prices so massively?

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