Barnes & Noble revenue falls sharply...

[graycyn]

Originally Posted by ProfCrash

I don't know, Sony has hung in with a similar model and a higher price point for a while there. Sony was, heck still might be, the prefered ereader outside the US. Sony has never had a good supply of books, the customer service has always been suspect, and the hardware is limited.

Sony was screwed in the US when the Kindle entered the scene but seems to be doing ok outside the US.

Are they *still* doing well outside the US though? I think, without keeping a bit more pace on the hardware front, they could become a harder sell as Amazon and Kobo continue to go international with their stores. Too many people like ease and convenience of just buying books on their reader and not sideloading.

I love my Sony readers, and haven't seen anything better suited to *my* needs thus far and I buy books wherever the price is best and they all go on my Sony, whether from Amazon, Kobo, BN or elsewhere, but I know I am not the majority.

[BeccaPrice]

I don't know what the likelihood is that they'll go out of business - I used to work at Borders, and I see B&N making some of the same bad decisions (fewer books, more junque for sale in the store) that Borders did in their last years. Borders, too, was known for crappy customer service. On the other hand, the Nook is arguably really good technology, just not supported well - and I really think that customer support has got to be a key factor in the emerging economy.

On one hand, I'll miss B&N if they do go out of business. On the other hand, I haven't been in one of their stores is over a year; and last time I was there, they didn't have what I was looking for.

[ProfCrash]

The Nook can read all EPubs which is why it would have done well even without access to BN bookstore. For some reason, BN failed to capitalize on that feature.

[pdurrant]

I hope my ebooks get transferred from Fictionwise before B&N disappears! I want to get them all downloaded in ePub.

[Kali Yuga]

B&N is not ignoring Amazon, it isn't ducking its head in the sand over ebooks, it didn't fail to leverage its physical presence.

Going international won't save the Nook business. The US is the largest book/ebook market in the world, and B&N knows the US business as well as anyone. Going international is expensive. You need to deal with hundreds of local laws and taxation schemes; you need to know what books sell well in what countries; you need customer service in a dozen languages. Just because someone in Uzbekistan can see your website doesn't mean it is actually easy to sell ebooks to millions of Uzbeks. They could not possibly afford to build up the Nook business (which has cost them hundreds of millions of dollars, and destroyed their profitability for at least 2 years) and build an international ebook business at the same time.

The Nook didn't crater in Q4 because it's a closed platform. B&N's app is available on tablets and smartphones. iBooks are more locked down than Nook books. Amazon has both DRM and a proprietary format, and no native ePub support, and didn't support Overdrive until about a year ago. B&N won't suddenly make billions by adding a few apps or putting out an Android tablet.

They didn't get into ebooks "too late," except perhaps by a few months. Apple had zero presence in books before the iPad launched, didn't make iBooks the greatest thing since sliced bread, and has eaten the Nook's lunch anyway.

B&N wasn't seriously thrown off track by the proxy war. They won't be helped by installing a revolving door to the executive offices.

No one will be able to get rid of Riggio.

Sure, B&N hasn't executed perfectly, but who does? Even Amazon has made many well-publicized mis-steps, which have caused many an MR poster to vow never to buy devices or ebooks from Amazon.

Ultimately, the problem isn't improper execution. None of its errors are genuine show-stoppers.

It's that transitioning from a brick & mortar retailer to an online ebook seller is a serious challenge to any company.

[Kali Yuga]

Originally Posted by jbcohen

What is the likelihood that Barns and Nobles will go out of business?

Fairly high.

In-store sales are down, which may mean more store closures. That means lower revenue, fewer places to push the Nook (which may be a saturated market already), and a black eye to the brand.

The Nook business has never turned a profit, and has cost B&N immense amounts of money -- around $50 million a quarter. At that rate, they'll burn through that cash in about one more year.

Their numbers aren't as bad as Borders were, management is still stable, and Microsoft's investment is almost certainly on better terms than anything offered to Borders. But I'd say their chances of survival are small, and if they can't turn it around by this time next year, then they're done.

And that's why their stock price is around $13 instead of $259.

[fjtorres]

Originally Posted by jbcohen

What is the likelihood that Barns and Nobles will go out of business?

Very low.
They still have a lot of Nook equity value to fritter away.
Basically, they've been mortgaging their house to buy groceries.

Since Nook started with a valuation of US$1.8 Billion (on a basis of 25% of the US ebook market) it'll take even the Riggio gang a few years to burn through the rest of the $600 million Microsoft money and the $90 million Pearson money. Plus however much they can get out of the Random Penguin, HCSS, and the rest of the BPHs.

Assuming their marke share actually dropped to 20%, and the valuation to $1.5 billion, the remaining 28% they can sell off without losing control should still bring in about $400 billion if they sell it before their market share drops much further.

I figure they have two years of the same old same old before they actually kill Nook. And long before that, the shareholder lawsuits will force a change.

Of course, that assumes the february report doesn't bring any further bad news. For example, they reported that digital content had increased by 13% but they didn't break it down. If that content increase came from ebook sales along with near-nil video and app revenue, things shouldn't get too bad. But if, once you subtract video and app sales, it turns out the ebook sales declined... on top of hardware decline and pbook declines...

Well, at that point the smelly stuff hits the fan.
At that point, it would be worth looking up the definition of "death-spiral".

[PatNY]

Originally Posted by Kali Yuga

The Nook didn't crater in Q4 because it's a closed platform. B&N app is available on tablets and smartphones. iBooks are more locked down than Nook books. Amazon has both DRM and a proprietary format, and no native ePub support, and didn't support Overdrive until about a year ago. B&N won't suddenly make billions by adding a few apps or putting out an Android tablet.

The closed platform certainly didn't help, did it? And while the B&N app is available on other platforms, people have to go out of their way to DL it, so it's not as front and center as it is on the Nook tablets. So selling more tablets might have sold more ebooks, not to mention clear up any inventory.

iBooks can afford to be more locked down than Nook books because it's part of a richer ecosystem. Same with Amazon's Kindle Fire.

What I don't get is that you dismiss every suggestion by everyone on how B&N might start to at least turn the corner. Yet you make no suggestion of your own. Are you saying they should just stick with the same old strategy and wait to die? Even if steps are successful in only helping them turn the corner but they eventually fail, isn't that at least the better road to take? Try some things new?

Sure, B&N hasn't executed perfectly, but who does? Even Amazon has made many well-publicized mis-steps, which have caused many an MR poster to vow never to buy devices or ebooks from Amazon.

See, Amazon is huge and into so many areas of selling. They can afford to make some major missteps in one area without crashing. B&N can't do that. And Amazon has never had the burden of so many B&M stores suddenly turning into dinosaurs.

Ultimately, the problem isn't improper execution. None of its errors are genuine show-stoppers.

Maybe there is no one single error that is a "show-stopper" by itself. But if you take all their missteps and add them together, well then it may ultimately stop the show.

--Pat

[murraypaul]

Originally Posted by PatNY

What I don't get is that you dismiss every suggestion by everyone on how B&N might start to at least turn the corner. Yet you make no suggestion of your own. Are you saying they should just stick with the same old strategy and wait to die? Even if steps are successful in only helping them turn the corner but they eventually fail, isn't that at least the better road to take? Try some things new?

The problem is that the obvious suggestions are all for things they should have done several years ago.
They are expanding internationally far too late. If they had managed it years ago it might have been profitable, but now they are just retreading group that Amazon and Kobo have already covered. They haven't concentrated on just the US market, they haven't expanded early enough, they've ended up in a mess between the two. Do or do not do, there is no try.
If they had entered the UK market before Amazon, when all that was on offer was the lackluster Sony bookstore, they might have had a chance at selling an integrated ecosystem. But the UK now belongs to Amazon, and B&N aren't even a blip.
They had a chance to be a first-mover, but now they are just offering something that seems frankly inferior to what Amazon are already offering. And for those that don't want Amazon, Kobo is already available. So why should anyone care about B&N?
It is frankly hard to think of anything that they should do that would make a huge difference now, but easy to think of things that they should have done.

[fjtorres]

Originally Posted by murraypaul

It is frankly hard to think of anything that they should do that would make a huge difference now, but easy to think of things that they should have done.

True, the things they should do are things they should have done (at least two years ago--they are long-known faults) and *will* take some time to get them where they need to be.
But we're not looking at a Borders implosion; B&N is not on the verge of collapse within months. They'll live to see at least summer of '14 even under the most pigheaded management.

The only thing collapsing is the illusion that they are a top player and a counter to Kindle. The ebook market continues to be Amazon and "everybody else", and Nook is still (for now) top dog in "everybody else".

The emperor isn't nekkid, just wearing a very ratty bathrobe.
(He does need a new fashion advisor, though.)

[charmian]

After reading this thread: since everyone is giving their ideas about Nook, I have to say that even if Nook hadn't made the more glaring errors, it would have been very, very hard for them to succeed. The walled garden doesn't help, but reputable brands making open Android tablets like Samsung and Lenovo have also battled in this space, and not with great success. When I really think about it, other than the microSD slot (which Samsung's tablets have), I can't really think of any reason to prefer the Nook HD over the Nexus 7, which is universally recommended nowadays by Android enthusiasts. Amazon got the degree of success they have for their walled garden by aggressively pouring money into their ecosystem, money which I doubt Nook has. Where is the Nook Owner's Lending Library? The free videos you can get by paying for a membership? The daily free app? If they have these, I've never heard about it, which is then a marketing failure. The only special feature I'm aware of that Nook has is... you can look at e-books if you go into a B&N, which rather defeats one of the purposes of getting an e-reader.

Nook attracted attention in the first place because it was cheap and there was no one competing at that price in the 7" tablet sphere.

BTW, Shatzkin said something very interesting in his post: " Digital content sales were up 13.1%, but that’s alarming too. The company has sold a lot of devices since last Christmas (I don’t know, but one would expect the number of NOOK devices in the market has gone up by more than 13.1% in the past year) and last year they reported (according to Publishers Lunch) that NOOK business rose 43% during the holidays."

If he is correct, why are digital sales so anemic?

[fjtorres]

Originally Posted by charmian

BTW, Shatzkin said something very interesting in his post: " Digital content sales were up 13.1%, but that’s alarming too. The company has sold a lot of devices since last Christmas (I don’t know, but one would expect the number of NOOK devices in the market has gone up by more than 13.1% in the past year) and last year they reported (according to Publishers Lunch) that NOOK business rose 43% during the holidays."

If he is correct, why are digital sales so anemic?

Lower prices would be my first guess.
Nook's Pubit and Smashwords are likely making up an ever-increasing share of Nook sales.

Not a disaster.

But definitely alarming to Shatzkin and his BPH clients who may be seeing their high-priced titles supplanted by cheaper indie titles.

[MovieBird]

Originally Posted by ProfCrash

When Amazon went international the Kindle was available on every continent, sans Antartica and geo restricted books were available to all. Since then, Amazon has slowly introduced Amazon bookstores for specific countries. Kobo has done a more extensive international roll out but still does not match Amazon.

All of this worries me, as the BN model for delivery of books is the only one I find acceptable out of the major players. I don't do proprietary formats, nor will I purchase books where I need proprietary software (Adobe Reader) to even get the goddamn file. I've given up on DRM, but at least BN will allow me to download a file directly from their website.

With that said, BN won't let me purchase UK books, whereas Amazon will. If I'm reading a British author, I want the UK book without all the localization crap (Philosopher's Stone anyone?). Canadian author, ditto. Amazon make this easy, all I have to do is put in a fake UK address on my credit card and I magically get the edition I want.

Here's the question, does Kobo make it easy to purchase international versions? Are they still fing up their books by running them through a meat grinder, Koboizing them?

[PatNY]

Originally Posted by fjtorres

True, the things they should do are things they should have done (at least two years ago--they are long-known faults) and *will* take some time to get them where they need to be.
But we're not looking at a Borders implosion; B&N is not on the verge of collapse within months. They'll live to see at least summer of '14 even under the most pigheaded management.

The only thing collapsing is the illusion that they are a top player and a counter to Kindle. The ebook market continues to be Amazon and "everybody else", and Nook is still (for now) top dog in "everybody else".

The emperor isn't nekkid, just wearing a very ratty bathrobe.
(He does need a new fashion advisor, though.)

Agreed. Better late than never. And the worst option is to try nothing. To just sit there with their old strategy and die a slow death. At the very least, they can make that death less painful and more honorable. They can go down fighting! And maybe, just maybe, they will have a decent robe at the end to be buried in.

--Pat

[AnemicOak]

Originally Posted by Kali Yuga

The Nook didn't crater in Q4 because it's a closed platform. B&N's app is available on tablets and smartphones. iBooks are more locked down than Nook books. Amazon has both DRM and a proprietary format, and no native ePub support, and didn't support Overdrive until about a year ago. B&N won't suddenly make billions by adding a few apps or putting out an Android tablet.

I haven't seen anyone saying the book part being closed was a problem. It's that their tablet hardware is more locked down than any of their tablet competitors and B&N doesn't have enough of an ecosystem (not just books, but movies, music & apps) for that to work well.