Barnes & Noble has revealed plans to outsource some services related to its Nook ereader as it closes two of its offices to save money.
The Fortune 500 firm, which remains one of the biggest bookseller brands in the U.S., has announced a partnership with Bahwan CyberTek (BCT), a software services and product company headquartered in India. Though Barnes & Noble said that it “remains committed to serving Nook customers,” it will now hand over control to “certain Nook technology services,” which will include cloud management and related development support for Nook software.
“Over the last two years, the Company has done a significant amount of work to improve Nook’s overall performance,” explained Fred Argir, chief digital officer at Barnes & Noble, in a press release. “While we have been able to reduce costs, we still have a lot more work to do to rationalize the business. We believe that by outsourcing certain technology functions of our Nook business we will further improve Nook’s performance.”
This isn’t the first time Barnes & Noble has outsourced development to third parties — the company once made its own tablets in-house. But it shifted to hardware partnerships back in 2013, and Samsung was the first to bring a Nook tablet to market. Barnes & Noble continues to introduce new Nook tablets in conjunction with Samsung, so it appears that the tie-up has worked well. While Barnes & Noble will continue to manufacture its Nook ereaders in-house for now, this latest move could signal the start of something more substantial, in terms of either expanding its ereader partnerships or reconsidering its ereader plans altogether. Indeed, most data suggests that ereader ownership is in decline, partly due to the rise in smartphones and tablets and partly due to a reported resurgence in physical books.
However, Barnes & Noble has been gradually moving away from its reliance on books to sell myriad other products in its stores, and recent results have been looking more promising. But the company’s Nook business has been struggling, which is why it’s not only outsourcing services to BCT, it’s also closing offices in Santa Clara, Calif. and Taiwan. Barnes & Noble said that this should help it save around $8 million in expenses and $5 million in capital expenditure. However, the company also expects to pay around $6 million in severance pay and other “transition related” costs.