Barnes & Noble bails out on Nook tablet biz

B&N will shift manufacturing of its Nook tablet lineup to third-party partners to design co-branded tablets.

Nook HD+
The Nook HD+. Eric Franklin/CNET

Barnes & Noble is taking its losses and running.

In a statement released Tuesday, the retailer revealed that it's pulling out of its Nook tablet manufacturing business in the face of ongoing losses:

The company plans to significantly reduce losses in the Nook segment by limiting risks associated with manufacturing. Going forward, the company intends to continue to design eReading devices and reading platforms, while creating a partnership model for manufacturing in the competitive color tablet market. Thus, the widely popular lines of Simple Touch and Glowlight products will continue to be developed in house, and the company's tablet line will be co-branded with yet to be announced third party manufacturers of consumer electronics products.

The Nook news was tucked into Barnes & Noble's financial results for its fiscal fourth quarter and full fiscal year, which bore the latest bad tidings about losses for the Nook division. For the quarter, Nook revenues dropped by 34 percent to $108 million as device sales fell. And for fiscal 2013, Nook revenues declined by 16.8 percent to $776 million.

Sales of music, books, and other digital content rose by 16.2 percent for the year but slid by 8.9 percent for the quarter. Barnes & Noble blamed the fourth-quarter slide in part on the drop in device sales.

Looking ahead, the company plans to sell off its existing inventory of the Nook HD and Nook HD+ tablets through the holiday season. Barnes & Noble has also promised to continue support for the tablets in its retail stores and to offer software upgrades via its digital bookstore.

"We are taking big steps to reduce the losses in the Nook segment, as we move to a partner-centric model in tablets and reduce overhead costs," Barnes & Noble CEO William Lynch said in a statement. "We plan to continue to innovate in the single purpose black-and-white eReader category, and the underpinning of our strategy remains the same today as it has since we first entered the digital market, which is to offer customers any digital book, magazine or newspaper, on any device."

 

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