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Dispatches from the Digital Revolution

Santa wasn’t so good to B&N this year

Source: Bn.com

Source: Bn.com

It was a tough break for Barnes & Noble this holiday season. The Nook side of the business was down 12.6 percent compared to last year’s figures—a disappointing number, particularly when you consider the relatively new release of two devices (the Nook HD and Nook HD+). B&N CEO William Lynch admits that sales fell short of expectations and the company will be “examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward.”

In contrast, Amazon seems to be celebrating “record holiday growth.”  And here’s an interesting fact for you: according to Experian Marketing Services, Amazon’s Kindle Fire was the second most-searched-for product on the web this holiday season, beating out the iPad (losing the number-one spot only to Uggs. Yep.). Of course, search activity doesn’t necessarily correlate to sales, and on that front, Amazon is—per usual—very tight-lipped about actual data. As to be expected, there is some speculation as to how well Kindle Fire devices are actually doing in the Great Tablet War.

The fact is, it’s a tough market, and since ebook sales (and other media purchases) are still heavily linked to their platforms, consumers are buying more than just a tablet—they’re also buying into the service. On top of that, Amazon’s focus on customer satisfaction, even at the risk of profit, makes it really hard to compete.

Doesn’t mean you can’t try, though. Pearson recently invested in the Nook business, which has exciting potential particularly when you think about the education market:

From Pearson’s perspective, the main logic of the deal is that it gives its digital educational content broader distribution. Will Ethridge, the chief executive officer of Pearson North America, said the companies will work together to make “a more seamless and effective experience for students.”

And then came Amazon’s announcement for the new year, intended to appeal to college students: for the month of January, those with an active Amazon Prime student account (which requires a .edu email address) can save $50 on the 8.9-inch Kindle Fire HD device.

But even with the $50 discount, according to the LA Times, the cheapest eligible model is still $249. Although tablet and ereader costs have come down as a whole, the high-end devices are still costly. Unfortunately, these are also the most appealing. Additionally, the accelerated rate at which new products are released to one-up the competition, at least in my opinion, puts a lot of strain on the consumer, especially during a time when budgets are tight, raises are scarce, and buyers are, as a result, extra discerning.

Here’s my own experience. I’ve got a Nook Color: I’m happy with it, I use it a lot, and I don’t really “need” an upgrade. But I really wanted to get the HD (the ability to save pages from magazines really sang to me). In the end, (at least for now) logic prevailed, and my bank account told me that I probably shouldn’t upgrade. I wonder if others, like me, are holding out on the upgrades, whatever brand device, in favor of their slightly out-of-date, but still reliable ereaders and devices. I guess that’s the name of the game with any gadget these days.

Regardless, whether people are holding out for the next one or satisfied with their old one, any hesitance to buy makes things that much more competitive.

Based on the 2102 holiday season—historically a time for expensive tablet purchases—do you think this spells trouble for B&N (particularly when there is speculation that the company could spin-off its Nook business)?

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This entry was posted on January 10, 2013 by in Business, Technology and tagged , , , .

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