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Distinguished Scribe
gb18
Posts: 817
Registered: ‎12-06-2010
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Microsoft's $300 million Nook investment

[ Edited ]
Bibliophile
5ivedom
Posts: 3,544
Registered: ‎12-03-2011
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Re: Microsoft's $300 million Nook investment

Very interesting.

 

I think he's wrong that it's a lost investment.

 

If you look at Windows 8 Nook App consistently gets promotions and often is way above Kindle App in downloads.

 

So, if nothing else, Nook is gathering up Windows 8 customers as Nook customers.

 

*****

 

We have two things here -

 

Nook Devices and sales to those device owners.

Nook Apps and sales to those app owners.

 

The losses are in Device sales. Something completely separate.

 

Existing Nook Device owners will mostly stay. B&N just has to provide a good-enough software experience (though that's not guaranteed given what Nook HD and HD+ stability was like).

 

Existing App owners will mostly stay.

 

So B&N's Nook division could become profitable easily - IF it were willing to give up future expansion via devices.

 

At some point that might be a good strategy. To instead focus on Apps. Let's just hope they build those apps internally and focus on quality and stability and user experience.

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keriflur
Posts: 6,606
Registered: ‎01-05-2010
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Re: Microsoft's $300 million Nook investment

Are you saying they should have other companies make hardware that then receives the nook label, or that they should not sell nooks at all?

 

If the former, do you think this would be as profitable for the hardware maker as making hardware for the Play market?  If the latter, where would B&N sell apps?

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patgolfneb
Posts: 1,758
Registered: ‎09-10-2011
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Re: Microsoft's $300 million Nook investment

In reality isn't BN integrating the hardware and contracting out the actual manufacturing? Their design / engineering seems to be limited to the case and interface plus the reader app. They haven't cut corners on component choices like really cheap offerings or the original fire but I don't see much in house design. My guess is component makers are approching them or responding to proposal requests with on screen, and internal hardware based on BN criteria.

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5ivedom
Posts: 3,544
Registered: ‎12-03-2011
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Re: Microsoft's $300 million Nook investment

Yes, that is what B&N is doing. If my understanding is correct, then B&N is doing exactly what PatGolfNeb wrote.

 

*******

 

Regarding Devices.

 

Tablets are not going to be a profit center for ANYONE in the low end.

 

Because iPads were a profit center - but Google Nexus 7 and Nook and Kindle Fire forced Apple to go to iPad Mini (which is mid-end) and reduce profits.

 

This forces B&N to go into low-end. No profits.

 

If they do their own device - profits from content sales.

IF they do Play - then neither device profits nor content profits. Makes no sense. Might as well write Google a cheque and wind up shop.

 

Surface is a profit center but Microsoft will also be forced to go into smaller tablets.

 

Basically, Tablets are going to be left with 10% to 20% volume high-end and 10-20% mid-end and rest all low-end.

 

iPad and Surface will eat up high end and mid end.

 

That leaves nothing for Amazon and B&N and Google.

 

Google doesn't mind because it only cares about search revenues.

 

However, for Amazon and B&N it's a problem. Amazon perhaps wants to get into search and display advertising itself and doesn't mind.

 

Where does that leave B&N?

 

With a zero profit device on which it can sell content.

 

*****

 

I think Android Tablets in the low end market are just Manufacturers doing free R&D for Google. Google gets search revenue and Play Store content sales. The Manufacturers get nothing.

 

So, what Amazon and B&N are doing i.e. keeping content sales for themselves, that's the only viable strategy.

 

Of course Samsung is trying to make high-end tablets using Android. It might work. It certainly worked for Samsung phones.