As Barnes & Noble prepare investors for disappointing quarterly results on Thursday, the company will move away from making hardware and put more emphasis on shifting digital books, a New York Times source says.
The company - America's biggest bookseller and the maker of the Nook tablet - has announced that yearly revenue for the Nook division (device sales and ebooks) will be below the $3bn predicted, and that the division will once again make a loss. B&N issued the advice ahead of its full Q3 results on Thursday.
B&N had a total revenue of £7.1bn in the fiscal year 2012. Revenue from Nook sales and digital content sales in 2012 was $933m for the full year in 2012, with the division making an overall loss of $261.7m. It seems like the division was unable to pull off the tripling of sales expected this year, and crucially, that the division was unable to turn a profit.
Recent holiday results for the Christmas just gone showed Nook section revenues fell by 12.6 per cent in the nine-week period to Christmas, compared to the year before. It was the device that was dragging profits down: digital content sales increased 13.1 per cent, but Nook device unit sales declined compared to the prior year.
Since the tablet was launched in 2009, Barnes & Noble has put significant investment into producing the Nook hardware and platform. But it looks like the forthcoming gloom will force the bookseller to change its policy:
“They are not completely getting out of the hardware business, but they are going to lean a lot more on the comprehensive digital catalog of content" said the NYT source.
The death of the Nook hardware would remove one small-scale competitor from the cut-throat tablet market, where it is hard to compete against Amazon, Apple and Google. B&N's deal with Microsoft in April last year could signal a direction for the Nook as a etail store rather than a physical device. ®