There are numerous published reports saying that Barnes & Noble may decide to spin off its Nook e-reader business, a move that experts say might help grow the business by attracting new investors and separating it from the bookseller’s struggling traditional operations.
“The Nook business has been a growth business for Barnes & Noble,” Sarah Rotman Epps, a senior analyst with Forrester Research, tells the New York Times. “But there’s no doubt that continued growth and international expansion will take sustained investment that Barnes & Noble shareholders will not have the patience for.”
“The Nook business has been a growth business for Barnes & Noble,” Sarah Rotman Epps, a senior analyst with Forrester Research, tells the New York Times. “But there’s no doubt that continued growth and international expansion will take sustained investment that Barnes & Noble shareholders will not have the patience for.”
- KC's View:
-
The Nook has been a success story for Barnes & Noble, helping it avoid the utter irrelevance that doomed Borders and drove it out of business. But reports have suggested that Barnes & Noble does not make money on Nook sales, and that its shareholders simply won’t stand by even a successful product that does not immediately improve the company’s bottom line.
This is interesting, since the competitor that Barnes & Noble really ought to be worried about is Amazon - and one of the thing that distinguishes Amazon from almost all comers is the fact that it is is willing to lose money in the short term if it believes that these losses actually represent an intelligent investment in a long-term strategy. That was the case with its Prime loyalty program, which lost money but compensated in the long run by generating a lot more sales. And if most reports are right, it isn;t even making money on the Kindle, but is using the e-reader in all its iterations as a way of selling more content.
It seems to me that one of the advantages that Amazon has in this case is an ability - a willingness - to think strategically, and use a variety of tactics to support its strategies. Barnes & Noble (and a lot of its other competitors selling everything from books to movies to food) is thinking tactically and short-term.
This could be a fatal mistake.
