Quote:
Originally Posted by ZodWallop
Sorry man. I PROMISE I'm not being intentionally dense. But I still don't see where you are going here.
Are you implying that the the Nook is a rebranded Hanlin, Netronix or Boox? You've implied it three times based on nothing that I can see. .
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Not literally.
But something like that.
Are you familiar with how companies get their gizmos to sell?
I'll try to simplify, just in case:
At the top of the involvement spectrum you have inhouse development/outsourced manufacturing. Sony and MS are doing this for their new consoles. MS has a large team of engineers and coders that has been working with partners to design the critical components since 2016. They defined the features and capabilities of the components, the power of the cooling fan, the path of airflow, everything. Four years designing, testing, revising. And half an hour designing the case.
They then pass the designs to their manufacturing partners in Taiwan, Singapore, Malaysia, China, etc.
It's their product all the way. They control it.
A notch below this, is the ODM market: involvement here runs different levels but as a rule the marketing guys list the features and traits they want, the money guys specify a per unit pricing range, and the tech guys on both sides iterate an exclusive design. The inhouse guys evaluate how the features will be implemented and what tradeoffs are needed, what pitfalls might come. Like, if weight matters, just how thick can the plastic be vs the size and weight of the battery. Or if a charger is included, how big, fast, and expensive can it be. Your techies make sure you get a design that is competitive and runs your software well. This looks to be where Kobo lives. It's their software and it's their name on the box and they (and Netronix, their ODM) consistently put out solid competitive products.
Thing is, not all ODM partners are equally good and not all clients get the same attention. Big clients buying lots of units, by the million, get a lot of say; outfits buying a single small lot get less.
Near the bottom, there are the OEM deals. The client there gets an existing design and *might* get different color plastic plus the silk-screened logo. If you stop by the "electronics" section of a pharmacy you might find alarm clocks, DVD players, maybe tablets with brands like Emerson, Craig, Sonic, or something else that look suspiciously alike. Take them apart and you'll find the same design housed in different plastic.
Years ago, a british outfit called Interead proudly announced the Cool-er reader. Cheap for the time and in a rainbow of colors. They latter anounced they'd sold 25,000. A big achievement for the time, when Sony sold maybe 100,000 a year.
https://gizmodo.com/cool-er-ebook-reader-review-5271551
A couple months later, they were gone. Total life from intro to bankruptcy, one year.
Plastic aside, that design was all over in 2008/2009 under a half dozen names, all with the exact same features. They company brought nothing to the table than anybody else. And as the market moved on past the first Kindle, customers moved on.
At the lowest level, there are the co-branding deals like when B&N signed up to sell a million Samsung Android tablets with the Nook reader app preinstalled. (No need to revisit how "well" that worked out, right?)
So, where does Nook stand?
With all tech stuff outsourced they're most likely OEMing a pre-existent design. Every years there's a couple dozen asian designs that never make it west so theirs no quick way of telling, if they're rebadging a design or not. But since they're not exactly cutting edge hardware the odds of it being a custom job like the first Nooks is very low.
This doesn't mean the hadware is bad.
But when you look at Nook financials (under $100M a year for both hardware and books) it's clear the hardware (tablet and readers running $120-180) aren't moving even Cool-er volumes, in a mjch bigger market. Their total hardware sales run around $40-45M. For three separate designs, three contracts, three production runs. How's that look? 30-40,000 units? Maybe 10,000 each? Around $10M each contract? $20M.
For that an ODM that is decent enough money but not a contract you bend over backwards for.
If B&N gets lucky and sign up good OEMs they may not miss the tech staff they fired. But they might also get poor quality control, preinstalled malware, exploding power supplies.
Control is vital to protecting your brand and customer base.
Nook hasn't and they now have a big hole to dig out of.
And I don't think relying on getting lucky with low five figure deals is something you can rely on. Its not just fraders that Nook barely registers with. If tbey were standalone, they'd be bafely above kickstarter levels for OEM/ODMs.
And I wouldn't be counting on their new owners having "deep pockets" being of much help. Ask Kobo home much support they get from Rakuten's "deep pockets". Considering how little previous management invested in Nook, saying they'll do more is a long way from "a lot".
The investors might also see the whole deal differently today than a year ago. Their top priority has to be stemming the B&M bleeding and rebuilding the minimum wage staffs they fired. Because their strategy has always been pump and dump. Rework B&N enough to report a small profit and IPO it and Watersones as a combo. And in that combo,Nook is an even worse fit than with B&N alone.
Odds are still with Nook staying a zombie for a couple years before moving it or closing it. It's not as if $50m a year of ebooks is going to missed much.
Remember "too big to fail"?
There's also "too small to suvive".