Friday, January 4, 2013

B&N Next Move

Holiday numbers are coming in and while tablet sales have been brisk, Barnes and Noble has not been as lucky.  As a big B&N consumer, our family must visit their store at least once a month.  But we are also tablet users, specifically iPads, and use them extensively to play games, watch videos, and use other apps.  Yet we haven't migrated to e-books... YET.  I am sure we will, but there has always been something special about opening a book and paging through the chapters to get to the end of the book.  It is hard to replicate with a device that tells me the percentage of the book that has been read.  Still, I expect that we all will start buying e-books and the question will be from whom... Nook, Amazon, Apple?

So what can B&N do to rebound from a bad Q4.  "Sales from stores and the website sank 11 percent to $1.2 billion, the New York-based company said yesterday in a statement. Revenue at the Nook unit, which includes devices, accessories and content, fell 13 percent to $311 million."  I do not want to see B&N become another footnote, like Borders.  But tablets are invading our lives and the Nook lacks what Apple and Google possess, a real library of apps PLUS the integration of these same apps across devices like tablets, smartphones, and computers.  Not just books, but games, pictures, videos, music, too ACROSS devices.  I believe this integration is essential.

In the retail space, B&N has begun to diversify its product line, adding toys and gifts to its merchandising efforts.  But more diversification is necessary to succeed.  People still love to leave their home to shop and B&N can continue to be a destination.  What products to add, perhaps bring Game Stop into the mix.  And make Microsoft a bigger presence, selling not only Xbox but also their line of phones, tablets, and accessories too.

As to the digital side of the business, with competition fierce, an expanded partnership with Microsoft may be the solution to the issue of integration.  Tying in more closely to a Microsoft App store that gains credibility and expands the usefulness of the product line.  The Nook product line may be ranked superior for its hardware, but it is in the usefulness and ergonomics of the software with the hardware that I believe matters most to the consumer.  Getting the consumer to see that value may be most important.

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