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 $199like the Kindle Fireand 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 enda 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 earningsbefore interest, taxes, depreciation and amortizationto $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 weve 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.”