Barnes & Noble cutting Nook Color and Tablet prices to $139 and $159
Less than three months have passed since the Nook Color and Nook Tablet saw a price drop, but Barnes & Noble is cutting the prices of its e-reader tablets again. The Nook Color will now cost just $139 …
Context & Ripple Effects
Barnes & Noble has been ratcheting Nook hardware prices down all year: after launching the Nook Tablet at $249 in November 2011 (announced at $249 ahead of a November 17th release) and cutting the 8GB model to $199 alongside a Nook Color drop to $169 in February (February's cut to $169), this move takes the Color to $139 and the Tablet to $159 — the second reduction inside the year, and per The Verge the second in under three months.
The timing matters because the device business now sits inside Nook Media LLC, the subsidiary formalized with Microsoft's investment in October 2012, and because Barnes & Noble's June quarter showed per-share losses with hardware like the Simple Touch dragging revenue even as digital content sales rose. Pricing the tablets aggressively into the holidays is the visible expression of a strategy that treats devices as the funnel into the content store, bankrolled partly by Microsoft's five-year commitment announced in May.
First-order effects
- Holiday shoppers get the Nook Color at $139 and the Nook Tablet at $159 — prices that undercut where both devices sat as recently as February — while Barnes & Noble absorbs further hardware-margin compression on units sold through Q4.
- The cut lands weeks after the Nook Media LLC joint venture closed, meaning Microsoft-invested capital is now directly underwriting a cheaper device lineup aimed at Amazon and Apple's e-book turf.
Second-order effects
- Amazon and Apple face renewed price pressure on their own sub-$200 tablets heading into the holiday quarter, since the Nook's content store only wins customers if the hardware matches Kindle Fire-class pricing.
- Publishers and distributors selling through the Nook bookstore gain volume potential from a larger installed base, but the economics shift further toward Barnes & Noble monetizing content rather than devices.
Third-order effects
- If the pattern holds, dedicated e-reading tablets complete their slide toward commodity pricing, with vendor profitability resting entirely on digital content attach rates — a structure that favors players who can subsidize hardware with services revenue or outside capital, as Microsoft's stake gives Barnes & Noble.
- The Nook Media subsidiary structure points toward e-book businesses being carved out of retailers as separately valued assets, making future partnership or divestiture options easier than if the devices stayed on the parent's books.
The trend: E-reader and small-tablet hardware is racing toward commodity pricing, with vendors like Barnes & Noble using device discounts — increasingly subsidized by strategic investors — to defend their share of the digital content store.