Nook on annual brand deathwatch list

[fjtorres]

Each year, the 24/7 Wall Street web site publishes a list of the ten brands most likely to disappear within the following 18 months. This year, Nook and two national print magazines show up; Nook at number two on the list.
http://247wallst.com/2013/05/23/ten-...ppear-in-2014/

This year’s list reflects the brutally competitive nature of certain industries and the importance of not falling behind in efficiency, innovation or financing.

The list also reflects how industry trends can accelerate the demise of certain brands.

The rules of the game are straightforward:

We continue to use the same methodology in deciding which brands will disappear. The major criteria include:
1.Declining sales and losses;
2.Disclosures by the parent of the brand that it might go out of business;
3.Rising costs that are unlikely to be recouped through higher prices;
4.Companies that are sold;
5.Companies that go into bankruptcy;
6.Companies that have lost the great majority of their customers; and
7.Operations with withering market share.

Each brand on the list suffers from one or more of these problems. Each of the 10 will be gone, based on our definitions, within 18 months.

Their track record over the years is a steady 70% accuracy so they're not infallible. But just showing up on the list is bad news unto itself.

Of Nook, they say:

Barnes & Noble Inc.’s (NYSE: BKS) e-reader was destined to struggle from the start. It was launched in October 2009, roughly two years after Amazon.com’s Kindle, which was, and has remained, the market leader. Both products were hit by competition from Apple’s iPad before the e-reader business even hit its stride. Adoption of tablets is forecast to grow 69.8% in 2013, while e-readers are expected to drop 27%.

The Nook was thrown a lifeline a year ago, when Microsoft invested $300 million in Barnes & Noble’s digital business, but to no avail. It has been downhill since. Sales at the company’s Nook segment, which includes both the e-reader and online books, declined by 26% between the third quarter of 2012 and the third quarter of 2013. The Nook’s disadvantage may have little to do with its hardware or software and more to do with size of its online audience. It competes against much larger e-commerce sites that have access to hundreds of millions of new readers. While Amazon has more than 130 million visitors a month according to Quantcast, Barnes & Noble has just over 6 million visitors

The stories for ROAD & TRACK and MARTHA STEWART LIVING are the usual for the print magazine business; declining ads.

With print advertising in a multiyear decline, some magazines have weathered the decline better than others. These two, however, have suffered sharp drops in advertising revenue over the past five years. Magazines also carry the heavy legacy costs of printing, paper and distribution — a problem not shared by online-only competition.

The clock is ticking...

[afv011]

As things stand now, I have to agree it doesn't look too rosy for them. I hope they can get themselves out of the hole, but getting in bed with MSFT is probably not the right long term strategy.

[fjtorres]

Originally Posted by afv011

As things stand now, I have to agree it doesn't look too rosy for them. I hope they can get themselves out of the hole, but getting in bed with MSFT is probably not the right long term strategy.

And who else is willing to throw good money into Nook right now?
It's not as if MS put any strings on them; all they got out of the deal was a Win8 app (that showed up late) and a chance to sell nook ebooks (guaranteeing Nook at least $350M over 3 years). Without that guarantee, B&N would probably be in Chapter 11.

Whatever happens to Nook, the damage has been self-inflicted, as is typical of most companies that have ended up on that list. And of the ones that managed to survive, most of those ditched their entire management team--as Best Buy did last year.

Odds B&N does that? Riiighhhtt...

If they're to survive into XMAS '14 the very people who got them into this mess are the ones that have to find a way out.

[frahse]

by afv011
As things stand now, I have to agree it doesn't look too rosy for them. I hope they can get themselves out of the hole, but getting in bed with MSFT is probably not the right long term strategy.

Originally Posted by fjtorres

And who else is willing to throw good money into Nook right now?
It's not as if MS put any strings on them; all they got out of the deal was a Win8 app (that showed up late) and a chance to sell nook ebooks (guaranteeing Nook at least $350M over 3 years). Without that guarantee, B&N would probably be in Chapter 11.

Whatever happens to Nook, the damage has been self-inflicted, as is typical of most companies that have ended up on that list. And of the ones that managed to survive, most of those ditched their entire management team--as Best Buy did last year.

Odds B&N does that? Riiighhhtt...

If they're to survive into XMAS '14 the very people who got them into this mess are the ones that have to find a way out.

I agree with both you guys.
There have been times in my life and various careers, I have had to face the fact that there were no good decisions to be made.

But to quote one of my favorite type sayings from literature, "We still live!"

B&N can say that for now.

B&N might have been stupid at times and certainly played a big roll in the demise of the small book stores, but they were no more bad guys than many others and I hope they make it as a book store along with BAM. These are the last two in the area I live in.

As for the Nook product, I just don't know. I see that Walmart is offering right now several Tablets from 7 inches on up, and from $69 on up and that has to suck money out of the tablet and reader market.

[charmian]

If the Nook brand disappears, what does that look like? They stop selling the Nook hardware, stop the expensive development, and probably keep the online ebook store, which remains as an app (possibly renamed B&N).

On the other hand, will this really be that harmful to B&N? It seems more like they're getting rid of a liability, so if anything this might be improve B&N's chances of survival.

[mr_nihilism]

It's only because I haven't bought one.

[jgaiser]

Sigh.. Just bought a Nook HD+. Actually think it's probably the best product they've put out -- once I upgraded the firmware to give access to Google markeplace.

I'll survive fine with it if B&N goes away and I've still got my Kindles.

[NickyWithNook]

I just want to continue to have access to the many, many books I've bought from there.

[jgaiser]

Originally Posted by NickyWithNook

I just want to continue to have access to the many, many books I've bought from there.

It's another thread... Download and strip DRM.

[charmian]

What I'm curious about is what this will do to the US e-ink reader market. This will leave Kindle with a vast market share, unless Kobo starts to get really popular, although that seems unlikely.

[cfrizz]

Originally Posted by NickyWithNook

I just want to continue to have access to the many, many books I've bought from there.

Then I suggest you download and strip the drm that is the only way to permanently keep your ebooks, or buy them all over again from someone else, or pirate them.

Originally Posted by charmian

What I'm curious about is what this will do to the US e-ink reader market. This will leave Kindle with a vast market share, unless Kobo starts to get really popular, although that seems unlikely.

The reading market will be fine. As you pointed out Kindle will probably become bigger, but so will the tablet market and the other epub stores will also increase business since they just use standard epub rather than another locked in version of epub.

I have NO sympathy for B&N, they were late to the plate and then had a locked down version to keep people locked to their store and had higher prices to boot.

They trashed FW, botched the switch over to them, and only just added Google Market to give people more choices and flexibility.

If they were too stupid or stuborn to see which way consumers were going that is their own fault!

[fjtorres]

The death of the brand doesn't necessarily mean the end of the bookstore.
(The RIM brand, for example, died last year but the company survives as Blackberry.)

The thing is that the brand itself is being tarnished by the struggles and controversies surrounding it. Like this:
http://www.hughhowey.com/does-bn-man...stseller-list/ http://www.thepassivevoice.com/05/20...ings/#comments)

So a potential buyer might choose to rename the ebookstore.
One possibility (teeth gnashing alert!) might see Nook become XBOX ebooks or (much less likely) get folded into Google Books or get bought by somebody else with their own strong brand.

[Rbneader]

This would really stink if so. Amazon definitely doesn't need less competition in the US. If B&N pulls out Amazon will have the US market 99% to itself.

Honestly, I think it's important for B&N to have ebooks, even if they take a hit on some of the hardware. They're going to need to change things around a bit - not sending so much hardware to partners for one thing - but I don't think they're in an unrecoverable spot, particularly since their latest tablet efforts are reasonably awesome. People always forget that companies can play the long game. Amazon did it. Microsoft is famous for it, with the latest example being the Xbox division which was a losing proposition for years. Since MS bought into Nook, I've been wondering if they're going to bring part of their long-game experience into the discussions with B&N.

[fjtorres]

Originally Posted by Rbneader

This would really stink if so. Amazon definitely doesn't need less competition in the US. If B&N pulls out Amazon will have the US market 99% to itself.

Not quite. There would still be the BPH's partner-in-crime: Apple.

[Rbneader]

Originally Posted by fjtorres

Not quite. There would still be the BPH's partner-in-crime: Apple.

Apple doesn't make ereaders. They make tablets. The tablet market is full of all kinds of competitors, B&N isn't even in the top 10 players there. They and Amazon are basically the only people selling ereaders in the US currently, and they seem to be the only people actually interested in it.

Once the DoJ finishes pulling the big publishers out of bed with Apple they might be more open to support Nook, but that's just a complete guess.