Quote:
Originally Posted by SensualPoet
The store gets a margin only from selling each device (as if it were any other inventory item like a hard cover, CD or toy).
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That *is* how it is sold in the partner outlets, no?
And it appears to be the way Amazon bookkeeps Kindle.
As a rule, retailers' overhead covers the cost of stocking and selling a product, unless they're receiving co-marketting or rebate funding. It makes sense to treat Nook as a separate product if it is to be a self-sustaining business at some point.
What I don't quite get is how, at 29% of the ebook market and $1.5 billion a year in sales, Nook could *not* be standalone profitable. At that scale, development and customer support costs should be practically noise and while hardware margins are clearly thin the content margins are plenty healthy. So, where the losses?
Nook is supposed to be in the same general league as Kindle and a cut above Kobo and Sony, among the high-visibility players, and Kindle is by all accounts self-sustaining. Unless their margins on their retail-partner sales are unusual, their hardware losses should be offset by their ebook profits with plenty left over.
The only three ways I can see Nook as a money-losing proposition at this point is if:
- Their Nook hardware costs are way higher than Amazon's
- Their customers are getting their ebooks from places *other* than their ebookstore
- Their back-end/overhead is eating them up alive
Considering their aggressive hardware pricing over the last 18 months it would be the height of folly to be *forcing* a race to the bottom on hardware prices if either of those three were true, no?
I'd hate to think they were pursuing a Palm-style "market-share at any cost" campaign, considering their shallow pockets.