Barnes & Noble has no plans to back out of the tablet race.
Michael P. Huseby, Chief Executive Officer of Barnes & Noble, Inc., revealed in the company's Fiscal 2014 third quarter financial results on Wednesday that the company plans to sell new NOOK color devices in Fiscal 2015. The news shouldn't be surprising given that the company announced months ago that hardware will be produced by an outside partner from here on out.
"We remain committed to delivering world-class reading experiences to our customers through our reading centric e-Ink and color reading devices," Huseby said. "The Company is actively engaged in discussions with several world-class hardware partners related to device development as well as content packaging and distribution. As a result, we plan to launch a new NOOK color device in early fiscal 2015."
The book chain's financial report shows that the NOOK segment, which includes digital content, devices and accessories, was down 50.4 percent from a year ago, bringing in only $157 million. Device and accessory sales were also down to $100 million for the quarter, a 58.2 percent drop compared to the same quarter last year. This drop is due to a lower unit selling volume and lower average selling prices. Digital sales were also down 26.5 percent due to lower device unit sales.
"The Company did not introduce any new tablet products this past holiday season, contributing to the third quarter sales decline," reads the report. "Instead, the Company executed its plan to sell through most of its existing device inventory, while also building additional tablet devices to meet holiday and post-holiday demand, using previously acquired parts and components."
Barnes & Noble also indicated that the staffing levels in certain areas of the company have changed, leading to specific job eliminations after the quarter ended. The retail book chain added that "additional actions" may be needed.
In an earnings call following the report, Huseby said that the company firmly believes that "having a digital offering is vital for our mission and [is] relevant to the booksellers. We also have the opportunity to better package physical and digital content offerings together, and we are actively considering and testing."
Tablet or no tablet, Barnes & Noble wants to make money from e-books. The problem the company faces is that its biggest competitor in the e-book business, Amazon, doesn't solely rely on book sales. Sure, the retail book store sells movies, magazines, toys and trinkets, but Amazon is so much more. To fight in the tablet business, the book store will need to not only take advantage of a third-party device maker, but find a way to be different and irresistible, even more so than before.