Business

Amid slumping Nook revenue, Barnes & Noble says it won’t kill its color tablets after all

Image Credit: VentureBeat/Ricardo Bilton

Remember when Barnes & Noble said it was pulling the plug on its color tablets? Well, that may not actually be the case.

Alongside the company’s second-quarter earnings today, Barnes & Noble said that it was committed to making Nook devices, including its color tablets.

“If we want to be in the content business, we need to be in the device business, no matter how they’re produced,” Nook Media CEO Michael Huseby said during the company’s earnings call today.

Huseby’s comments come after Barnes & Noble reported overall revenue of $1.3 billion, which was down 8.5 percent year over year. This led to an overall loss of $87 million.

The Nook business, which has posted losses consistently over the last few quarters, contributed more than its share to the loss:  Nook hardware sales dropped 23 percent to $84 million, and content sales were down 15 percent at $69 million. Overall revenue from the segment plunged 20 percent to $153 million.

Translation: Things are looking pretty grim for the Nook.

There is, however, hope we”ll see some semblance of a turnaround: Barnes & Noble knows that, for the Nook business, hardware and content go hand-in-hand.

“We believe that by offering high quality reading devices at lower cost, we will be able to drive higher volumes of devices and therefore higher content adoption and revenues,” Huseby said.

In other words, Barnes & Noble has come to the same conclusion as Amazon’s Jeff Bezos, who often remarks that Amazon “makes money when people use their devices, not when they buy them.”

Barnes & Noble recently capitalized on this realization: On Sunday, the company dropped the price of its Nook Simple Touch with Glowlight to $100, a price point that allows it to undercut Amazon’s $120 Kindle. (The price cut should also help Barnes & Noble cut down the inventory of the device as it works on a follow-up.)

A price cut alone, however, is unlikely to be enough. As the Nook business continues to bleed cash, Barnes & Noble has to figure out how to squeeze more revenue out of everyone who buys a Nook. To do so, the company is planning a redesign of its website, which will be focused on getting customers to buy more content for their devices.

“Our top priority in our operating strategy is to increase all categories of our content revenue. We are working on innovative ways to sell content to our existing customers and are exploring new markets we can serve successfully,” Huseby said in a statement.


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