| Barnes and Noble has been seeing declining revenues for the last few quarters and the company according to 24/7 Wall Street, is on the 18th month deathwatch. This article is getting lots of attention, but is a fine example of sensationalist journalism at its finest! It does pose an interesting question though. How can Barnes and Noble turn their hardware and software ecosystem around in the next 18 months? According to 24/7 Wall Street, they said “Barnes and Noble e-reader was destined to struggle from the start. It was launched in October 2009, roughly two years after Amazon.com's Kindle, which was, and has remained, the market leader. Both products were hit by competition from Apple's iPad before the e-reader business even hit its stride. Adoption of tablets is forecast to grow 69.8% in 2013, while e-readers are expected to drop 27%.” The article went on to say “The Nook was thrown a lifeline a year ago, when Microsoft invested $300 million in Barnes & Noble's digital business, but to no avail. It has been downhill since. Sales at the company's Nook segment, which includes both the e-reader and online books, declined by 26% between the third quarter of 2012 and the third quarter of 2013. The Nook's disadvantage may have little to do with its hardware or software and more to do with size of its online audience. It competes against much larger e-commerce sites that have access to hundreds of millions of new readers. While Amazon has more than 130 million visitors a month according to Quantcast, Barnes & Noble has just over 6 million visitors.” Obviously, when it comes to the financial aspect and the investment from Microsoft, this is all true. I think the Nook eBook division is going to be fine in the short-term, but needs to expand their international footprint to do better in the long-term. The Nook brand is only available in the US and UK, you can’t buy the hardware or purchase eBooks outside of these two regions. At a financial call last year, the CEO of Barnes and Noble announced they would expand into eight more countries within a calender year. They have five months to go, and have not entered any new markets. Meanwhile, they invested a substantial amount of money into Nook Press, their indie self-publishing program. Regrettably, this is only available in the US. The United States market is over saturated with e-Readers and unlike smartphones, people don’t upgrade to every new iteration of hardware. People tend to read on perfectly fine two year old devices, and most people who want to buy an e-Reader, already has one. The United Kingdom often is a staging ground to penetrate the rest of Europe, Barnes and Noble has been there for almost a year and have not branched off. It is critically important that B&N begins to sell their Nook Hardware in Germany, Spain, France, Netherlands, Australia and New Zealand. They also have to engage publishers who are friendly with them to offer eBooks localized in those markets. Finally, they need to offer their Writing Life platform to the UK and to all other markets and reach distribution deals to offer the books in local bookstores. Barnes and Noble is at a critical juncture in their hardware and eBook ecosystem. When any company starts to see cumulative revenue loses, for many quarters, something needs to be done. Maintaining the status quo and dropping the price on the hardware is something that cannot be sustainable. It is my firm belief that in order for their fortunes to be turned around they need to expand into Europe, Australia and New Zealand. This has been Amazon and Kobo’s winning strategy with their self-publishing and eBook programs, and obviously they deal with the exact same publishers Barnes and Noble does. Barnes and Noble Needs to Expand into International Markets is a post from: E-Reader News |
Sunday, May 26, 2013
Barnes and Noble Needs to Expand into International Markets
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