Services & Software

B&N reportedly to 'move away' from making Nook hardware

The bookseller won't abandon its line of e-readers and tablets, but will license content to third-party device makers, sources tell The New York Times.

Are dramatic changes at hand for Barnes & Noble's Nook strategy?
Sarah Tew/CNET

The Nook hasn't worked out as Barnes & Noble had hoped, reportedly leading executives at the bookseller to rethink its hardware strategy.

The bookseller, which acknowledged last month that Nook segment sales for the holidays were much lower than expected, will "move away" from building its own hardware to a strategy that focuses on licensing content to third-party developers, sources tell The New York Times.

"They are not completely getting out of the hardware business, but they are going to lean a lot more on the comprehensive digital catalog of content," said an unidentified person familiar with the company's plans.

A B&N representative denied that it was getting out of the hardware business but declined to comment further, citing pre-earnings quiet period rules.

"We have no plans to discontinue our award-winning line of Nook products," B&N spokesperson Mary Ellen Keating told CNET.

B&N had expected its Nook business to generate greater demand in the face of lower sales from its retail chains, but rising product development and marketing costs have reportedly cut into Nook's contributions. However, B&N announced earlier this month that it expected to record a higher loss from its Nook business for fiscal 2013, which ends in April.

For the nine weeks ended December 29, Nook business revenue fell to $311 million, a 12.6 percent drop from the same period a year earlier. Though sales of digital content rose, sales of Nook devices declines.

The company will hold a conference call at 1 p.m. PT on February 28 to discuss its third-quarter results. But many of the questions will undoubtedly focus on the future of its Nook business.