End of the Nook? B&N reviews putting itself up for sale

In absolutely shocking news B&N has revealed that it’s thinking about selling itself – It’s rather strange with one group of potential buyers headed by its chairman and founder Leonard Riggio.

First, the Kindle 3 sells out and now B&N’s future disappears – At this rate Amazon will probably die of happiness by the end of the week.

So , what exactly is happening with B&N?

Well, the New York Times reports that B&N is considering selling itself

… said Tuesday afternoon that its board was considering a sale of the company, possibly to an investor group led by its chairman and founder, Leonard Riggio.

The retailer said its board decided to explore a possible sale and other strategic alternatives because its stock was “significantly undervalued.”

B&N warns us the review might decide selling B&N isn’t the right option. However, the fact that it’s already hired Lazard as its financial advisor and a law firm for legal advice indicates the Board is pretty serious.

Leonard Riggio owns 28% of the company and is a likely takeover candidate. Ronald Burkle has shown considerable Gekko-like interest in B&N in the past and owns 19% of the company. While Leonard Riggio has said he wants to stay with the company ‘through the challenging years ahead’ it’s unlikely he’ll stay if he doesn’t get to buy B&N or if Ronald Burkle wins.  

The stock price increased a lot on this news since, obviously, this is the kind of thing that promises a great future for a company.

What will the impact on Nook be?

If the company that’s making the Nook is being put up for sale it isn’t a very good sign.

Here are the broad possibilities –

  1. Google buys B&N and uses Nook to integrate with Google Editions. It seems an opportunity custom-made for Google.  
  2. Leonard Riggio buys B&N and continues to focus on Nook.  
  3. Ronald Burkle buys it and tries to re-sell it for a profit. He might even carve out the Nook and eBook divisions and sell them to Google or Sony.
  4. An investor group not interested in Nook buys B&N and kills the Nook.

It’s the last possibility that is going to weigh heavily on Nook sales and on the Nook team. The realization that your project might be ended soon couldn’t be very encouraging for the people working on Nook 2 and Nook 3.

If a user is deciding on Kindle vs Nook the last thing she wants to hear is that B&N might sell itself. Doesn’t exactly paint an image of stability and reliability. 

There’s a borderline chance this might all be an elaborate plan to give Leonard Riggio greater control. It’s a rather risky way to go about it.

How does this impact Kindle vs Nook?

You’ve got to be exceptionally brave to put $199 into the Nook if B&N is selling itself.

Kindle 3 is the much better eReader as this Kindle 3 vs Nook post clearly spells out. Add on the fact that the company behind Nook is selling itself and suddenly the decision is a no-brainer.

The Kindle 3 suddenly goes from best eReader to ‘perhaps the only eReader guaranteed to last beyond 2011’. It’ll last a lot longer than that – However, Nook looks in danger of being killed by the new ownership and Sony Reader isn’t doing too well.

Amongst all this joy there’s also a worst case scenario for Amazon.

Will Google buy Nook and turn Kindle vs Nook into a fair fight?

There couldn’t be a more logical fit for the Nook than the open embrace of Google. Google has been cozying up to Sony Reader. However, for just $1 billion or so they can get Nook and combine the #2 and #3 eReaders into a solid threat against Kindle 3 and Amazon.

My money’s on Google buying Nook as soon as they get the chance. They might even buy B&N to ensure they get Nook.

Nook customers are just too valuable. A lot of companies are going to want to buy B&N to be able to get access to Nook and Nook owners.

Kindle 3 is either going to have zero competition or deadly competition

It’s such extreme possibilities –

  1. If Google gets its hands on Nook we suddenly get a decent eReader with the scary Google Editions store.  
  2. If Amazon somehow manages to buy B&N or its Nook division it can pretty much end the eReader Wars. 
  3. If another investor buys B&N it’s pretty likely Nook will flounder or die out.
  4. If it goes back to Leonard Riggio he’ll probably continue to fight the good fight.

The Kindle 3 will in 6 months either see Nook playing on the same team or Nook will have disappeared or it will remain Kindle 3’s biggest enemy.

Deja Vu – This Christmas Nook ereader will be out of stock

BrightHand broke the news that Nook preorders are now shipping on December 11th (Nov 30th was the original shipping date).

those placing pre-orders now are being told that they won’t get it until the second week in December.

Wall Street Journal have their own take on it –

A second wave of customers was told it would ship Dec. 7. Now new customers are being told that their pre-orders will ship Dec. 11

Buying a Nook sight unseen for Christmas?

The way things are trending it seems that soon people will have to buy a Nook without touching it or playing with it if they want one for Christmas –

 Those who would like to give the Nook as a Christmas present will apparently have to seriously consider buying it unseen, as devices pre-ordered next month might not ship until too late.

Also, it seems like stores will only have demo units (this might be a bit of an exaggeration by BrightHand) –

 At this point, it’s not clear if B&N stores will have more than demo units this year; all sales may have to happen on the Web.

Growing Pains? Smart selling?

There are a few possibilities –

  1. The Nook is a bigger hit than thought. Possible.
  2. Barnes & Noble simply underestimated the eReader market thanks to Amazon’s secrecy. This is the most probable reason.
  3. B&N want to push sales and are trying to replicate what happened with Kindle 1 and the ensuing rush to buy Kindles before they sold out. Nintendo Wii and Apple products have used the strategy before (knowingly or unknowingly).
  4. B&N want to sell as many Nooks as possible before the lawsuit when an injunction might halt sales. This is the second most probable reason.

The news arriving so soon after Alex’s request for an injunction certainly points to it as a reason. If B&N were simply trying to pump sales they’d wait until Thanksgiving.  

Why does the BN site not say any of this?

As of 6:18 pm PST the Barnes & Noble site did not give any warning of the delays. Perhaps it only shows up after you order – which defeats the purpose.

Has Amazon managed to fool B&N into underestimating the market for eReaders?

This is the most probable reason that B&N are out of stock.

They simply had no idea of what the demand would be (and certainly no idea of how big Christmas Season could be).

They probably came in expecting 100,000 to 200,000 sales and then found out that a few million eReaders are going to sell this holiday season and Nook’s share (25-30%?) amounts to a lot more than 100,000 Nooks.

The two extremes i.e.

  1. Stealing Amazon’s strategy of ‘sold-out’ to create demand. 
  2. Getting fooled by Amazon’s secrecy.

Point to just how clueless we are about the actual eReader market.

You have to give Amazon credit – even after 2 years no one has any credible idea of actual Kindle sales figures.

Nook roadblock? Spring Design sues B&N

Engadget have some really interesting news – Spring Design, the makers of the Alex eReader have sued Barnes & Noble and it seems like B&N might be guilty.

The news first broke on BusinessWire (which is a Berkshire Hathaway company). They write –

“We showed the Alex e-book design to Barnes & Noble in good faith with the intention of working together to provide a superior dual screen e-book to the market.”

Spring Design first developed and began filing patents on its Alex e-book, an innovative dual screen, Android-based e-book back in 2006. Since the beginning of 2009 Spring and Barnes & Noble worked within a non-disclosure agreement, including many meetings, emails and conference calls with executives ranging up to the president of Barnes and Noble.com, discussing confidential information regarding the features, functionality and capabilities of Alex.

Throughout, Barnes & Noble’s marketing and technical executives extolled Alex’s “innovative” features, never mentioning their use of those features until the public disclosure of the Nook.

If Barnes & Noble really were talking throughout 2009, then there can be little doubt a Court might well feel the similarities in design warrant an injunction on Nook sales.

Take a look at the devices and the similarities seem too numerous for it to be a coincidence –

  1. 6″ eInk screen above a 3.5″ touchscreen.
  2. Almost identical placement of screens and page turn buttons and the ‘Read/Nook’ button in the centre.
  3. Android OS.

Here’s the picture –

Alex and Nook are so similar
Alex and Nook are rather similar

What happens Next?

Three possibilities –

  1. Spring Design lose.  
  2. B&N lose and are forced to pay royalties to Spring Design.
  3. B&N lose and are forced to stop selling Nooks. 

The benefit of the free publicity is overshadowed by the uncertainty and the fact that B&N might be forced to stop selling Nooks.

An early Christmas present from Spring Design to Amazon.

Did Nook really steal from Spring Design?

Who knows. Anything is possible.

  1. Spring Design might just be taking advantage of some talks they had.
  2. Barnes & Noble might have copied just the two screen layout and thought it wasn’t a big deal.
  3. B&N might have gotten ‘inspiration’ from Alex.

A judge and jury and high-priced lawyers are going to help decide so it probably doesn’t even matter who is right.  

Will keep you updated as more news and details emerge.