With the iPad, Apple is the dominant tablet manufacturer and with the Kindle Fire, Amazon has become the company to watch in the tablet space.
But don’t write bookseller Barnes & Noble (B&N) off. Its NOOK business, which started with E Ink e-readers, now has two tablets in its stable, the NOOK Color and the NOOK Tablet.
Increasingly, B&N’s NOOK business looks like it may just be the future of the company.
This morning, B&N reported its third quarter earnings. The good news: it managed to grow retail sales in a tough environment. The bad news: earnings were down, and below analyst expectations.
But the really good news is that sales from B&N’s NOOK division, which includes the NOOK devices, accessories and content, increased 38% year-over-year in fiscal Q3, to $542m. Device sales during grew an impressive 64% year-over-year, while digital content sales jumped 85%. All told, the company’s NOOK business is now larger than its college book sales division, which registered $525m in sales last quarter.
The numbers will almost certainly lead to further speculation about the possibility of B&N spinning its NOOK division off into a separate entity. While the company’s ability to grow retail sales suggests that the bookstore isn’t dead, it’s becoming quite clear that digital is the future. By spinning off its NOOK business, B&N may be better able to capitalize on that.
There are, however, risks. While B&N says that it’s maintaining or gaining marketshare for its e-readers and tablets, the competition is fierce. B&N’s primary competitor, Amazon, is reportedly prepping a 10-inch Kindle Fire, and while the B&N tablets don’t compete directly with the iPad in most instances, it’s worth noting that Apple is expected to unveil the iPad 3 soon.
This means one thing for B&N: it must keep moving forward. To that end, it’s prepping an 8GB NOOK Tablet that costs $199, the same price as a Kindle Fire, and is dropping the price of a NOOK Color to $169. Is that enough? We’ll soon find out.