Barnes & Noble has slashed the prices of its Nook Color
and Nook Tablet devices, in a move clearly intended to help them compete more
effectively against Amazon's aggressively
selling line of Kindle devices, particularly the Kindle Fire.
The Nook Tablet, shedding $50 from its price tag, is now $199—like the
Kindle Fire—and the Nook Color is now $169, a $30 price cut.
"Nook Tablet, Nook Color and [the $99] Nook Simple
Touch represent the highest-quality portfolio of reading and entertainment
products on the market at the best value," Barnes & Noble CEO William
Lynch said in a Feb. 21 press release.
Quality will be a necessary distinction for B&N's
tablets, as the devices compete against tablets not following the traditional
rules. Amazon has made a bet that its software resources will be so lucrative
over the long term that it can afford to take a hit on the hardware end—a
model that devices from Motorola and Samsung, for example, can't follow.
Can Barnes & Noble?
The 16GB Nook Tablet weighs 14 ounces and features 8GB of
on-board memory, 512MB of RAM, a 1GHz processor, a microSD slot, WiFi
connectivity, a battery capable of offering 11.5 hours of reading time and nine
hours of video watching, and a VividView display that supports 16 million
colors. It pairs these with a library of more than 2.5 million digital books
and magazines, a built-in email program, the ability to search the Web and
watch movies and TV shows through apps such as Netflix and Hulu Plus and to
listen to music through apps such as Pandora and Grooveshark.
"For any customer who
likes to read digitally, watch movies or TV shows, browse the Web, or help
their kids read and learn through interactive books and apps, our new $199 Nook
Tablet with 8GB is the best product value on the market," Lynch repeated.
On the same day, it announced
the drop in Nook pricing, B&N revealed the results of its fiscal 2012 third
quarter, which included a 12 percent decline in earnings—before
interest, taxes, depreciation and amortization—to $150 million. College sales
also declined 3 percent, from $540 million a year ago to $525 million.
However, total sales
increased 5 percent year-over-year, to $2.4 billion, and BN.com sales rose 32
percent from a year ago, largely driven by Nook devices and digital content
sales. B&N's consolidated Nook business increased 38 percent during the
quarter to $542 million, and Nook unit sales rose 64 percent.
“In the third quarter, our
traffic and sales in stores were the highest we’ve seen in five years,” Lynch
said in a statement. “Importantly, our NOOK digital content business
continues to grow rapidly, and according to some of the largest U.S.
publishers, we maintained or slightly gained share in the eBook market during
the third quarter."
G Asset Management, a 5
percent shareholder and B&N's fifth-largest investor has called on the
company to spin off its Nook business, to increase shareholder value, Bloomberg
reported Feb. 17. In a filing the same day, Michael Glickstein, G Asset's chief
investment officer, said B&N is undervalued and should separate its Nook
unit, possibly through a rights offering to shareholders.
One scenario, said the
Bloomberg report, is that B&N could be the majority owner of the brand, and
"the value assigned to the Nook shares would then be better reflected in
Barnes & Noble's stock."
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