The Barnes & Noble bookstores buy back bid
Right now, Barnes & Noble is sort of split into two pieces.
One of them is the digital sector, including NOOK hardware and NOOK Books. Also in this part is the college bookstore business.
The other part is largely the brick-and-mortar side, the physical bookstores.
If you were an investor, looking to buy one or the other, what would look more attractive to you?
Well, if you are Leonard Riggio, the answer is apparently the latter.
That may seem odd…aren’t e-books all the rage and the future?
Yes, that’s certainly possible…although they aren’t the majority of income being generated right now in the book business. It’s like…e-books are a candelabra sitting on a table. They are getting all the attention, but you still need the table to be able to serve dinner.
That certainly may change over time.
Why would Riggio make an offer like that?
Leonard Riggio already owns a large part of Barnes & Noble…and is really the founder of the company.
Part of this may certainly be sentimental…wanting to get back into the core business.
On the other hand, the NOOK is considered by some to have had a disappointing 2012. Getting into tablets put them into a different market, and a very competitive one.
I think it is possible that Barnes & Noble will take the deal, whatever it is exactly.
There is speculation that, if that happens, the NOOK is in trouble.
There’s been a lot of money invested into the NOOK line (including by Microsoft), and perhaps the NOOK investors really didn’t want to be in the brick-and-mortar business.
You might feel like it is all about selling books, so it should be the same market drivers, but that’s not the case. Selling paperbooks (p-books) and selling e-books may have some strong overlap, but running a brick-and-mortar store (and I speak as a former manager) and selling a piece of hardware are two very different things.
I have to say, I’m seeing a lot of talk about how heavily B&N bet on the NOOK.
That’s where I see something that feels fundamentally different to me about Barnes & Noble and Amazon.
Barnes & Noble bet on a device…Amazon bets on ideas.
Three ideas, specifically: service, selection, and price.
I always picture somebody pitching an idea in an Amazon meeting (after they sat around and read the summary together…they do that).
The idea is presented, and somebody says, “Yes, but how does that deliver better service, greater selection, or lower prices?”
I think Jeff Bezos has correctly identified those as core tenets that never need to change.
The Kindle brought people amazing new service…a bookstore at the end of your sleeve.
Kindle books initially brought you better prices (compared to hardback equivalents on New York Times bestsellers, for example).
The goal was for it to eventually improve selection (“Every book ever published”) although that wasn’t going to happen at first.
It’s not that every idea needs to serve all three tenets at once…service and price can be at loggerheads, for one thing.
Barnes & Noble led in some important ways with reading hardware and service (they had peer to peer booklending first, and a frontlit EBR…E-Book Reader).
It just didn’t feel to me, though, like it was an idea that was driving the NOOK…it was “MEtooism”, trying to compete with others.
If something came along that gave better service, better selection, and lower prices than the Kindle, do I think Amazon would embrace it?
We’ll see what happens (Barnes & Noble will announce third quarter results on Thursday, February 28th). I remember that some people were concerned about going with a NOOK (which I do think is a good piece of hardware) because of worries about Barnes & Noble having the long-term stability that they saw for Amazon…they may be feeling vindicated, although it’s a bit soon to tell.
I do think that, if, Riggio ends up owning the stores, it improves their chances to stick around. Leonard Riggio is able to innovate, and is clearly passionately committed to the business.
Here are some stories I found interesting on this:
- Barnes & Noble press release
- Reuters article
- TechHive: “Scaling back the Nook e-reader would be bad news for book publishers”
- SFGate on the stock: “Barnes & Noble Gains on Founder’s Plan to Buy Retail Assets”
What do you think? Is the NOOK a mature enough device to stand without the trade bookstores? Is Riggio doing this just because it makes good business sense, or is there an emotional component to it? Am I painting too nice a picture of Amazon, and not a nice enough one of Barnes & Noble’s motivations and vision? Could the bookstores survive without the NOOK for, say, ten years? Feel free to tell me and my readers what you think by commenting on this post.
This post by Bufo Calvin originally appeared in the I Love My Kindle blog.