Barnes & Noble recently announced that it expects its Nook e-reader business to report more losses when the company’s fiscal 2013 ends in April. The bad news could be a sign of things to come for e-readers, as consumers continue to gravitate more toward tablets.
According to The Wall Street Journal, Banes & Noble said its earnings before interest, taxes, depreciation and amortization (EBITDA) will demonstrate a more severe loss than the dip of $262 million it experienced in fiscal 2012. The company also said it expects annual revenue for its Nook Media division—which includes e-readers, tablets, e-books and college bookstores—to be less than $3 billion. As recently as January the company had forecast annual revenue for the division to be more than $3 billion.
Yankee Group Senior Analyst Boris Metodiev comments
“When we covered the announcement that Barnes & Noble intended to launch a ‘revolutionary’ new tablet in 2012, we were cautious about the prospect of the device establishing itself on the tablet market, and that was before we knew how Apple’s, Google’s and Amazon’s respective devices were going to fare. Now when we know all the details, it paints a dire picture for Barnes & Noble.
Even though the Nook compares well with many of its competitors’ tablets, the Barnes & Noble’s distribution channel and marketing of its products is nowhere near like those of the above mentioned big players. One problem for Barnes & Noble is that most people think of the company only as a book retailer—having good e-readers seems reasonable; manufacturing good tablets seems a bit of a stretch. And the e-reader market will continue to be suffocated by the plethora of 7-inch cheap tablets.
Another thing that doesn’t help the popularity of the Nook is that it runs on Android’s Gingerbread OS (version 2.3) which makes it quite outdated and unattractive for the consumer, compared to most other popular Android tablets running on Ice Cream Sandwich (version 4.0) or Jelly Bean (version 4.2).”
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Daily Insight | April 17, 2014
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