Catastrophic Decline in Barnes & Noble Nook Christmas Sales as Amazon Dominates eBook Market
Barnes & Noble entered the digital business with the Nook a bit later than Amazon, but was nevertheless able to quickly gain market share and became an important player in the US eBook market. However, this situation didn’t last very long, as the digital business of the once-largest book retailer in the US is now merely being carried along and can no longer be seen as a driving force for current and future developments.
The poor state of the digital division was evident in the past holiday season. From early November to the end of December 2013, revenues for the Nook division fell by 60.5 percent compared to the previous year. This is a disastrous result in multiple ways: the immediate financial loss is apparent, but more problematic are the prospects for the future.
Nook: Losses, Losses and More Losses
The new Nook Glowlight couldn’t turn the tide
Since the introduction of the Nook Simple Touch eBook Reader, Barnes & Noble has invested little time and money into developing new, dedicated reading devices. The Nook with Glowlight was hardly an improvement over its unlit counterpart and instead of updating the model in time for the 2012 holiday season, the bookseller launched two tablets. This move was the beginning of what is now shaping up to be a slow but sure end. Quarter after quarter, Barnes & Noble has reported negative financial results, largely due to losses from its Nook business.
With a 60 percent decrease in the sales of devices (tablets and eBook readers) and digital content during the typically lucrative holiday season (even more so in the US with Black Friday and Cyber Monday than elsewhere), this development can only be described as catastrophic. The digital business was already on shaky ground, as revenues during the same period in 2012 were 13 percent lower than in 2011. It doesn’t take a crystal ball to predict that radical changes are likely to occur (or will need to) in the near future if the bookseller is to turn things around.
This development has effectively handed the eBook market over to competitor Amazon, whose Kindle business continues to thrive. As a result, the retail giant is on the path to establishing a quasi-monopoly in the US eBook market. In Germany, this was avoided with the launch of the Tolino Alliance, much to the benefit of consumers.
What’s Next?
At the same time, the Tolino Alliance must keep a close eye on developments, as Barnes & Noble initially held its ground against Amazon, only to fall behind due to poor decisions regarding the development of its devices. This has resulted in a downward spiral from which the bookseller has been unable to escape. From the consumer’s point of view, Barnes & Noble does not seem to be making much effort either, as the current eBook reader model is a gentle update of the old device, and not the radical overhaul necessary to get back on track.
No page-turn buttons, no memory card slot… why choose the Nook?
The new Nook Glowlight is technically inferior to the Kindle Paperwhite yet costs the same as the ad-supported version of its competitor. Furthermore, customer reviews of the new Nook are less than stellar due to the absence of page-turn buttons and a memory card slot. The biggest issue is that the Nook with Glowlight now hardly differs from the Kindle Paperwhite, as the latter also lacks these features. Yet, Amazon’s competitor provides a significantly better E-Ink Carta display. Ultimately, consumers must ask themselves: why choose the Nook?
Once again, the possibility of spinning off the Nook business from Barnes & Noble is on the table, which is becoming increasingly likely given the ongoing series of losses in the digital division. The recent sales figures could be the straw that breaks the camel’s back.
Meanwhile, it will be interesting to see how Barnes & Noble achieves its planned international expansion. With the launch of the app for Windows 8, the bookseller has already taken the first step, with more steps expected by June 2014, potentially making Nook devices available in Germany. Even though the expansion is tied to financial support from Microsoft, given the poor performance, it’s still questionable if it will happen.
