B&N explains their results

[fjtorres]

B&N didn't ignore online.
Or eBooks.
They were players in both arenas in a timely fashion. In 2010 they owned a quarter of the ebook market.
They just failed to execute and threw away all their brand equity.
That isn't lack of vision; that is incompetence.

[Fbone]

Originally Posted by fjtorres

Seattle salaries aren't much lower and Lab126 staffing has long been pretty large. These days it's enormous.

https://www.bloomberg.com/view/artic...e-the-r-d-race

The issue isn't the absolute numbers at the back end, per se, but rather the management of that staff. Those 1600 employees should have been able to earn their keep if properly deployed and managed. If they were over-staffed, under-utilized, or over-paid that would be on B&N management. Same as it is on their management that their website has long been substandard or that they had to buy back Microsoft's investment in Nook for non-performance.

Plenty of companies deal with those tech issues every day without incurring massive losses year after year after year. It doesn't take a decade of fumbling around to figure those things out.

True, but Amazon also lost money for over a decade before they realized the real money is in advertising and web services. According to their 10-k filing all their profits came from advertising and AWS. Their retail division, including Kindle, is still unprofitable. It's possible this is by choice for tax reasons. In any case, when you receive billions of dollars from other revenue sources you can afford luxuries other companies (like Borders, B&N) don't have such as drone testing.

B&N's mismanagement was terrific but they didn't have the time to recover as they couldn't afford the years of R&D needed for expansion/growth.

[DiapDealer]

Originally Posted by Fbone

Their retail division, including Kindle, is still unprofitable. It's possible this is by choice for tax reasons.

That doesn't jive with the DOJ's claim (during the Apple lawsuit) that Amazon's ebook-business has been consistently profitable (even in the days of $9.99 best-sellers).

[Fbone]

Originally Posted by DiapDealer

That doesn't jive with the DOJ's claim (during the Apple lawsuit) that Amazon's ebook-business has been consistently profitable (even in the days of $9.99 best-sellers).

I (and the 10-K report) was referring to the entire retail division. Amazon doesn't separate out Kindle earnings. I can only go by what Amazon officially reports to investors and the SEC.

And I'm not sure if the DOJ's claim was for ebooks only or the entire Kindle infrastructure including Lab 126.

[DiapDealer]

Originally Posted by Fbone

I (and the 10-K report) was referring to the entire retail division. Amazon doesn't separate out Kindle earnings. I can only go by what Amazon officially reports to investors and the SEC.

And I'm not sure if the DOJ's claim was for ebooks only or the entire Kindle infrastructure including Lab 126.

OK, I Gotcha. I'm pretty sure they were talking about ebooks-only (considering the context).

[fjtorres]

Lab126 is almost certainly not profitable since it includes most of Amazon's R&D. Drones, AI, etc. Definitely not a place to look for profits.

Kindle hardware, though, is profitable and always has been.
The K2 cost at most $185 to build (at launch) and was probably around $150 at the time of the price war.
http://ireaderreview.com/2009/04/21/...-2009-isuppli/
The K4 cost about $113 max at launch.
http://ereadertech.com/2011/10/06/ki...ost-breakdown/
Similar studies are available for newer models.

There's a reason their pricing is described as "near-cost" and not "below-cost".
Considering their market share if they really were selling at a loss the feds would already be on them.



All the teardowns and cost analysis have shown they earn $5-10 per device before any Special Offers revenue. And that is the Basic Kindle. They higher priced models make decent margins. Especially Voyage and Odyssey.

[Pajamaman]

Originally Posted by fjtorres

B&N didn't ignore online.
Or eBooks.

I never said they did. I said they didn't have the advantage of being an online retailer.

[FizzyWater]

Originally Posted by AnemicOak

Riggio Reiterates B&N's Commitment to Restoring Growth

Maybe that's because they got tired of driving to the store, being told "we don't have that in stock but we'd be glad to order it for you", stand around while the customer service rep fumbles around on the internet to find the book you want, finally order the book(s), drive home, then drive back in a few days to pick up the book you ordered with their "help".

Given that you only have to spend $25 to get free shipping to their homes, it sounds like they're not ordering much in each visit online, so they're having it sent to the store to avoid shipping charges.

[fjtorres]

Originally Posted by Pajamaman

I never said they did. I said they didn't have the advantage of being an online retailer.

But they were an online retailer going back to the turn of the century.
They sold ebooks and ereaders before Amazon, going back to the Rocket Book era. And they had an extensive logistics system long before Amazon even got into business so I'm not sure what intrinsic advantage Amazon might have had from being online-only.

Now, if we were talking Borders, who farmed out their online business to Amazon until it was too late, then yes, Amazon had an advantage. But B&N was actually doing fine both at B&M and online until 2010. That's when they started shooting at their own boots. Sometimes while wearing them.

[Fbone]

Originally Posted by fjtorres

Now, if we were talking Borders, who farmed out their online business to Amazon until it was too late, then yes, Amazon had an advantage. But B&N was actually doing fine both at B&M and online until 2010. That's when they started shooting at their own boots. Sometimes while wearing them.

Tech greatly expanded around 2010. They had competent competitors. Development of in-house tablets, Android and iOS apps that needed constant upgrading each year to keep up with OS changes.

They had to weather a recession then skyrocketing commercial leases.

Then the self-publishing industry took off. Instead of earning $5 per book they received a few pennies. Very challenging unless one has good management with access to lots of capital.

Of course, B&N isn't the only retailer struggling. Bigger and better have and will continue to fall.