Barnes & Noble Reports $118.6M Loss On Revenue Of $1.3B In Q4, Plans To Open Nook Brand To Tablet OEMs
Barnes & Noble reported its fiscal fourth quarter earnings this morning, and the financials make it clear that the company is still struggling to figure out how it fits into the larger digital reading ecosystem.
Context & Ripple Effects
Barnes & Noble entered fiscal Q4 after Nook hardware had already weighed on revenue despite rising digital-content sales in 2012, followed by a holiday period in which Nook, store and BN.com sales all declined. The company had also said it expected to close as many as a third of its stores over the following decade.
Opening Nook to tablet OEMs shifts the digital-reading effort from selling only Barnes & Noble-branded devices toward placing the brand on other manufacturers’ hardware. The reported loss makes that change a response to pressure across both its device and retail businesses.
First-order effects
- Barnes & Noble can seek tablet OEM distribution for Nook rather than relying solely on sales of its own Nook devices.
- Tablet makers gain a potential reading brand and content storefront to integrate into their hardware offerings, while Barnes & Noble retains the task of making that proposition attractive to partners.
Second-order effects
- The move puts Nook into more direct competition for OEM placement with other digital-reading and content platforms, making hardware reach less dependent on Barnes & Noble’s own device sales.
- As dedicated e-reader shipments fall while tablets displace them, Barnes & Noble’s digital-content sales have a stronger incentive to travel across third-party tablets than to be tied to proprietary hardware.
Third-order effects
- If OEMs adopt Nook, digital bookselling becomes less coupled to a retailer’s owned devices, with the durable value concentrated in the reading brand, store and customer relationship rather than hardware margins.
- For Barnes & Noble, the model also separates the fate of its digital business from a retail-store base it has said will shrink over time, though OEM adoption is the key constraint on that shift.
The trend: Dedicated e-reader vendors are adapting to tablet substitution by treating their reading services and content stores as platforms that can extend beyond owned hardware.