For Barnes & Noble's Nook, the beginning of the end? (3 Parts)

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Summary: Revenues are collapsing. Margins are thinning. Is it the final chapter for the U.S. book retailer's device business?

By Andrew Nusca for Between the Lines |August 20, 2013 -- 15:32 GMT (08:32 PDT)

Books burning. (Photo: J. Ronald Lee/Flickr)

The U.S. bookseller Barnes & Noble revealed this morning that its core businesses—from brick-and-mortar stores to its Nook e-reader business—are collapsing.

The last massive entity in a rapidly consolidating industry, the company is engaged in a downward tumble. The question is whether it will slow to a stop or simply roll off a cliff.

The company posted quarterly revenues of $1.3 billion, down 8.5 percent from the same period a year ago. It posted a loss of $87 million, almost twice as much as investors expected.

Its Nook e-reader business, which includes hardware and digital content, logged revenues of just $153 million, down more than 20 percent from the same period a year ago. Hardware sales were down 23 percent and content sales were down almost 16 percent.

Its retail group, which includes brick-and-mortar stores and the company's namesake website, totaled $1 billion in revenue for the quarter, down 9.9 percent from the same time last year.

The bad news comes on the heels of an already tough quarter. Six weeks ago, its chief executive suddenly resigned. Eight weeks ago, the company decided to abandon its tablet computer business after a consistently weak showing against traditional computing giants such as Apple and Samsung. And two fourth quarter holiday seasons in a row, the company's Nook sales fell far short of its own expectations.

The conditions for a resurgence are far from hospitable. Despite just 22 percent of the U.S. book market—a certain Jeff Bezos-led company dominates—the company appears to have switched from an all-encompassing strategy of growth to a strategy of damage control.

"We are laser-focused on becoming more efficient and financially sound by managing both our operating expenses and inventory commitment levels," Barnes & Noble president and NOOK media CEO Michael Huseby said during the investors call explaining the company's fiscal results.

That's not to say growth is off the table; rather, that's a signal that B&N is locked in a race to the bottom for a device that has—expectedly—been largely commoditized thanks to Amazon's ruthless price undercutting.

Still, "If we want to be in the content business we need to be in the device business, no matter how they are produced," the company's executives said.
The only silver lining is the content business, for which the company has had some adoption issues.

"We believe that by offering high quality reading devices at lower cost we will be able to drive higher volumes of devices and therefore higher content adoption and revenues," Huseby said.

He added: "We have sold approximately 10,000,000 Nooks and our content activation levels need to better leverage that accomplishment. Therefore, we are implement programs to better serve our existing customer base and also aggressively exploring other target consumer markets with the potential to generate new revenue."

But time is running out; B&N's four-year-old Nook business has burned an estimated $1 billion or more since its inception, threatening to take down a 140-year-old company.

"We have already taken significant steps during the fourth quarter of 2013 to the first quarter of this year to reduce our cost structure in the NOOK segment we will continue our cost management efforts," Huseby acknowleged. "We believe that by implementing these plan actions, which are already underway, we will stabilize our business, drive growth and create value."

Can Barnes & Noble stand up and fight back? It may need to find the bottom first—and hope that its retail revenues hold out.

 

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By Will Shanklin August 20, 2013


Barnes & Noble did a bit of flip-flopping today, saying it will continue making tablets like the Nook HD+ (above) after all

Amazon gets a lot of credit for starting the budget tablet craze with the original Kindle Fire. But it was actually Barnes & Noble that released the first subsidized, affordable, 7-inch slate, in the form of 2010's Nook Color. The three generations of B&N's Nook tablets may have been limited by their software, but they also delivered solid hardware and good overall bang for your buck. So we weren't complaining today, when B&N announced that it won't be discontinuing its color Nook tablets after all.

The flip-flop, reported by CNET, comes about two months after Barnes & Noble had said that it would be dropping color (non-E Ink) tablets from its product line. That lineage includes the Nook Color, 2011's Nook Tablet, and last year's Nook HD and Nook HD+, which are now available at bargain-basement discounts.

The move also comes after a fair share of uncertainty and drama surrounding the company's future. Not long after the original announcement about ditching tablets, CEO William Lynch resigned. Chairman Leonard Riggio then took on more authority, considered buying out the company's retail wing, then today said he was backing off of that proposition. All signs point to a company without a clear path.



Where this leaves Barnes & Noble is anyone's guess, but that the company's Android-based Nook tablets are off the chopping block can only be a victory for consumers. Earlier this year, B&N added the Google Play store and the full suite of Google services to the Nook HD and HD+. Nook tablets' software and app selection had long been their Achilles' heel, but their newly discounted prices (US$130 and $150, respectively), high-resolution screens, and Google services now make them quite the bargain.

Just because B&N is resurrecting the Nook tablets, though, doesn't necessarily mean we'll see a new crop this year. The company said that at least one new Nook is lined up for the holidays (we'd place our bet on an updated backlit e-Reader), and other products are being developed.

Source: CNET

 

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By Will Shanklin August 22, 2013


Gizmag revisits the Nook HD+, with the Google Play store and a rock-bottom price

Image Gallery (17 images)

At Gizmag, we cover emerging technology. So it's natural that we'll gravitate towards the new: new devices, new services, new breakthroughs in science and technology. But every now and then, something that's been around for a while gets a fresh coat of paint and, in a sense, becomes new all over again. Like the Barnes & Noble Nook HD+. Do Google Play and a huge price drop make the tablet worth picking up, approaching a year after its release? We put it through the paces to try to help you answer that.

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History



First, a quick walk down memory lane. The Nook HD+ launched in November of 2012 as the more expensive big brother to the Nook HD. At release, the Nook HD+ cost US$270. It wasn't a bad price for the hardware, but limited software (read: a crappy app selection) posed a problem, as it always has for B&N's Nook tablets.

But earlier this year, just as tablet shoppers seemed to have forgotten about the Nook, B&N dropped a bomb by adding Google Play to the Nook HD and HD+. The Play Store, Gmail, and Google Maps were officially supported. Hell, Chrome became the default browser. Suddenly a tablet that had been held back by a half-cocked version of Android became a full-fledged Android tablet.



Unfortunately even the addition of Google Play didn't seem to get many customers' attention. So last month, as Barnes & Noble was announcing its intent to abandon tablet development (something they've since changed their mind about), the Nook HD family saw a massive price cut. The seven-inch Nook HD dropped to US$130, and the nine-inch Nook HD+ fell to $150.

Once customers make up their minds about a product, it can be hard to change that. But perhaps it's time to expand your thinking about the Nook HD+. Meditate, ingest some peyote, whatever it takes. Because we're looking at a large, easily-hackable tablet with a high-resolution display, a solid-enough processor, and Google Play – all for $150. It's a combination we haven't seen before.

The funny-looking tablet you can hold in one hand



Beginning with 2010's Nook Color, B&N's tablets have always had a, shall we say, "unique" look. "Bizarre" would be another way of looking at it. We're looking at large, thick, plastic bezels with a loop built into its lower-left corner.



That loop, apart from adding a differentiating flair, can be used to attach a lanyard. But do you really need your tablet to dangle from your wrist or backpack? It's an odd choice, to say the least, and one which Barnes & Noble has stuck with for three generations, including on the Nook HD+. We don't mind it, and we applaud the company's originality. From a certain perspective, it even looks stylish. But it also isn't something we expect other companies to copy anytime soon.



The best thing about the Nook HD+'s build is that it's a piece of cake to grip with one hand. The 4th-generation iPad, which costs over three times as much, can be cumbersome to hold for long periods. It also isn't ideal for one-handed use. The Nook HD+, with its thick bezels and light plastic build (it's 21 percent lighter than the iPad), is much easier to grasp with one paw.

The Nook HD+ is a pretty beefy tablet (it's 11.4 mm thick), but that isn't necessarily a bad thing. A thin tablet can look sleek and sexy, but we're more concerned with how comfortable the dang thing feels in your hand. Here the Nook HD+ delivers. It's a great balance between one-handed comfort and screen size.

About that screen



Here in August of 2013, the Nook HD+'s screen isn't cutting edge. After all, it's been about 18 months since the first iPad with Retina Display launched, and the Nook's sits a half-step behind it in overall display quality.

But with that said, this display is still pretty darn good. Its 256 pixels per inch (PPI) density is roughly the same as the iPad's 264 PPI. Text and images aren't as crisp as they are on the new Nexus 7, but everything is all plenty sharp, as you can see in the image below.



We like the Nook's 9" screen size. It gives you a lot more real estate than mini-tablets like the Nexus 7 and Kindle Fire do (the Nook gives you 70 percent more screen area than those two). But it's still small enough to lend itself to that one-handed use we appreciate so much. Its 3:2 aspect ratio also makes it more logical to hold in portrait mode than 16:10 or 16:9 tablets.

The IPS display is plenty sharp and a great size, but it isn't perfect. Whites have a slight yellow tinge to them. It isn't something we think will throw off your experience, but if you put its display side-by-side with an iPad or Nexus 7, those tablets' whites will look whiter. Brightness is also solid enough, but other tablets get much brighter on the highest settings.

Performance



Performance isn't mind-blowing, at least by mid-2013 standards. On a technical level, the Nook HD+ is running a dual-core Texas Instruments OMAP 4470 processor, clocked at 1.5 GHz. It's speedy enough for most uses, but pick up the Nook HD+, then pick up the new Nexus 7 or iPad 4, and you (unsurprisingly) see a noticeable boost.

If the Nook's combination of large, high-resolution screen and Google Play was sounding too good to be true, then performance is that compromise you were waiting for. The device isn't too sluggish, but be prepared for some minor lag here and there. It was enough of an annoyance that we rooted it, installed Cyanogenmod, and ran some root-level performance tweaks to level that playing field (more on that in a minute).

We don't sweat benchmarks too much these days, but for those keeping score at home, our Nook HD+ tallied a 437 (single core) and 765 (multi core) in Geekbench 3. When we installed a CM10.2 nightly build (based on Android 4.3), those jumped to 444 (single core) and 815 (multi core).

If benchmarks help you to put things in perspective, more power to you. Our experience-based perspective, though, is that the Nook HD+ delivers solid enough performance for most users, as long as you don't mind taking a couple steps back from the bleeding edge.

Battery life, and the case of the missing camera



Battery life isn't stellar, but it also isn't too much of a concern. In our tests, we streamed video with brightness set at 75 percent while connected to Wi-Fi. The Nook HD+ conked out after five and a half hours, almost identical to what the new Nexus 7 scored in the same test. The only caveat there is that 75 percent brightness on the Nexus looks brighter than it does on the Nook.

With more typical use, including periods of both activity and inactivity, the Nook HD+ should have no problem lasting a full day.

As for cameras, well, there are none. If you like to video chat, you'll want to use your smartphone or laptop, or just skip the Nook altogether. There's also no rear camera for those awkward tablet photo ops.

Stock software



Barnes & Noble's version of Android, in itself, is par for the course for a content-subsidized tablet. It's built on top of Android 4.0 Ice Cream Sandwich, and styled heavily with light grays. Apps, books, and other media are highlighted on a carousel near the top of the homescreen. You naturally get a full selection of Nook-branded media apps. Similar to Amazon's Kindle Fires, a lot of it is designed to push you towards B&N content.

But the addition of Google Play, introduced in May of this year, takes a fairly ho-hum Android skin and makes it much more enjoyable. You get the full Google Play store, and the full suite of Google apps. Gmail, Maps, Google Now, and all the other usual suspects are in tow. Apart from the occasional compatibility issue, anything you could download on any other Android device is fair game here.



The addition of the Play Store and Google's services takes a down-and-out Barnes & Noble shopping mall, and invites the bigger and better shopping mall next door to take over half the stores. It makes the Nook HD+ a much a more versatile tablet than it used to be.

To hack or not to hack?



Nook tablets have always been easily hackable. You can chalk that up to the fact that they let you boot from their microSD card slots. You can root them, install custom software on them, and even run that custom software straight from the SD card.

Barnes & Noble obviously wants you to leave the stock firmware on there, buy lots of Nook e-books, and help them to fight their way back from hard times. But if you root your device and install a ROM based on stock Android, your $150 investment will go even farther.

We won't dig too deeply into the nitty-gritty details of hacking the Nook HD+, but if you head over to xda-developers, they have all sorts of instructions and files to help you out. The bottom line is you can grab a microSD, install Cyanogenmod, and come out with a pretty solid stock Android 4.3 tablet.

Hacking isn't for everyone, so we'd suggest browsing the various xda guides to see if you're comfortable with that kind of thing. Third parties will also sell you SD cards pre-loaded with the necessary files, but if you have a moderate comfort with technology, we'd suggest saving your money and reading some tutorials. Just know that you're voiding your warranty and are fully responsible for turning your device into a paperweight, should things go south.

Wrap-up



The Nook HD+ isn't a new device, and its manufacturer shows all signs of being on the ropes. But the flip side of that is the company is desperate to get your attention, to the point where it's dropping a very solid tablet down to a ridiculous $150.

If it still cost $270, it would be hard to wholeheartedly recommend the Nook HD+, even with Google Play. The competition (especially the new Nexus 7) is too good, and it's only going to get stiffer in the coming months, with two new iPads expected.

But at $150, the Nook HD+ has been reborn into one of the best tablet values around. If you want plenty of bang for your buck, we recommend heading to a store with display models, playing around, and possibly walking out with the cheapest tablet you've ever bought. You might save yourself $350 or so in the process.

Product page: Barnes & Noble