Barnes & Noble’s Nook Not a Best Seller in Q3

Barnes & Noble reported this week that it will be rethinking strategy for its Nook division, since slow sales of its e-reader led to a tough recent quarter for the nation’s largest book retailer.

The company reported an overall total revenue slump for its third quarter, down 8.8 percent to US$2.2 billion. Before interest, taxes, depreciation and amortization, Barnes & Noble had earnings of $55 million, a 63 percent drop from the $150 million it brought in last year.

Lackluster Nook sales contributed to the earnings slump. Revenue for the Nook division was down 26 percent from the same time a year ago, dropping to $316 million. The sinking sales did not come as a complete surprise; the device had a strong showing over the Black Friday weekend, but Barnes & Noble reported in January that the e-reader “fell short” of expectations over the remaining holiday shopping season.

Digital content sales did increase 6.8 percent from the same time last year.

The company announced Thursday it would be switching its focus with the Nook going forward, with content development — especially educational — as a top priority. It will also trim costs associated with the Nook.

As part of an effort to secure future financing for the Nook, Barnes & Noble last year entered joint ownership partnerships with Microsoft and Pearson. Barnes & Noble now owns 78 percent of the unit.

Barnes & Noble did not respond to our request for further details.

Is the Nook Cooked?

When the company debuted its e-reader, it was praised for launching a product that could help the traditional book retailer survive in an evolving market, unlike competitors such as Borders. With heavyweights like Amazon’s Kindle and the iPad on the scene, though, the Nook seems to have had trouble keeping up.

“Today the black and white e-reader market is in decline, the field has obviously gotten more competitive and, as a result, it’s been more difficult to sustain the initial Nook momentum,” Pete Wahlstrom, analyst at Morningstar, told the E-Commerce Times.

The Nook’s initial momentum was a huge accomplishment for Barnes & Noble, which put up a valiant fight against competitors with more experience in the hardware or digital content business, said Ezra Gottheil, principal analyst at Technology Business Research.

The e-reader field has grown beyond most expectations, though, and many consumers can afford to spring for a functional tablet rather than simply a device they use to read.

“The Nook was a lovely product, but the handwriting has been on the wall,” Gottheil told the E-Commerce Times. “The prices of effective smaller tablets have come way down, and their power and flexibility has gone way up. Frankly, I can’t think of a way Barnes & Noble can compete.”

How to Save the Nook

Amazon and Apple have compelling hardware, but it’s also their established ecosystems that make it so difficult for the Nook to stand up against the iPad and Kindle products, said Gottheil.

It’s easy for those with a Mac computer, iPod or iPhone to gravitate towards the iPad when shopping for an e-reader or tablet; they know they could read a book they purchased on iTunes on any of the devices. Amazon, with its worldwide customer base and deep library of digital content, can afford to keep hardware prices low, knowing it can make up the difference with sales of e-books.

“Amazon’s got a much bigger store and many more products, not to mention much more bandwidth for promotions and advertising,” Gottheil noted. “What’s more, they can tolerate running losses to drive sales. If Barnes & Noble had more unlimited resources like that, they might have a better chance. But their resources are constrained and they’re going up against the major content networks with Apple, Google and Amazon. When you’re at the bottom, there’s not much to do.”

A short-term solution could be to slash Nook prices to try to boost its customer base, said Wahlstrom, but that’s not necessarily a sustainable solution. Barnes & Noble has some long-term strategic planning to do, and it wasn’t clear from the earnings report exactly what some of those strategies might be.

“The Nook would need to leapfrog the competition in order to entice customers to shift over to the Nook platform, a difficult proposition at best,” he said. “We think the cuts need to go deeper to help Barnes & Noble generate larger profits. Perhaps this means joining Microsoft’s engineers in outsourcing or changing suppliers for the Nook hardware or, in a more extreme move, cutting out the Nook device altogether.”

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Why the Real Estate Industry Should Embrace the Cloud

The increased adoption of cloud computing over the past decade has enabled businesses across industries to meet their growing technology needs while efficiently gaining access to exciting new tools.

However, not every industry has kept up with the evolution of cloud technologies brought forth by digital transformation. A prime example is the real estate industry. Overall, the real estate sector has been slow to digitize operations and move to the cloud; leaving agents, brokers and their clients underserved.

Cloud computing can cover a lot of ground, with both infrastructure-as-a-service and software-as-a service availability. There is great potential for the real estate industry’s future in both areas.

When properly implemented, cloud computing accelerates the innovation and digitization of real estate services, bringing new apps and tools to the market more quickly. This also adds even more value to the buying and selling experience for agents, brokers and consumers alike.

While the cloud offers much potential for the real estate industry, it is important for companies to have an informed idea of what they want to accomplish before moving some or all their IT functions to the cloud. Don’t just jump on the cloud bandwagon; instead, determine what goals you want to achieve by moving to the cloud and develop a plan for an orderly transition.

If a company’s cloud infrastructure ends up looking exactly like its previous on-premises setup, it’s probably not taking advantage of all the benefits the cloud can offer. Real estate companies moving to the cloud need to think strategically about adding value through the transition.

With that caveat, there are tremendous benefits for real estate companies that move to the cloud.

More Data, More Power

A seemingly immense obstacle real estate companies face is the daunting task of implementing cloud-supportive infrastructure. But the truth is that real estate companies don’t have to plan, build, or operate their own data centers.

Instead, the cloud infrastructure providers can set up and maintain the infrastructure while real estate companies focus on what they do best: selling properties, serving customers, and equipping agents and brokers with the best tools to help them do their jobs.

Cloud infrastructure also offers real estate companies the computing power to run modern tools like data analytics and artificial intelligence. These technologies can help real estate companies find new customers, identify people likely to be interested in buying or selling their homes, and match customers to the best real estate agents to service their needs.

Real estate organizations often have access to huge amounts of market and customer data. However, the sheer volume of data makes it difficult to capitalize on. With cloud computing, real estate companies can gain access to the massive computing power needed to crunch the data, while paying only for the time they use that infrastructure.

Mobility and Disaster Recovery Solutions

Another benefit of storing data in the cloud is that it’s accessible from various devices, which is a boon for the growing mobile workforce. Agents, brokers, and home buyers and sellers are increasingly using smartphones and tablets to get work done remotely. The cloud is much more flexible, accessible, and secure than being tethered to a physical hard drive or on-premises server.

Furthermore, companies that transition to the cloud don’t have to build and maintain a remote disaster recovery site, which can be labor-intensive and time-consuming. Instead, critical data in the cloud automatically fails over to a secondary site in the event of a disaster. All that is required to access data in the cloud — anytime, from multiple devices, anywhere — is a solid internet connection.

Budget-Conscious Security

Major cloud infrastructure providers have a security track record that most real estate companies can’t compete with. They have huge teams of security professionals and the best available security technologies, policies, procedures, and controls to protect the information on their servers and data centers 24/7 with little or no human intervention.

Cloud security measures also support regulatory compliance and establish authentication rules for users and devices. This high level of data security is particularly important in the real estate industry, with customers sharing banking and other personal data during what’s often the largest financial transaction of their lives.

Customers want their real estate transactions to be as secure as possible, and cloud infrastructure providers offer that higher level of protection.

Creating an Open Ecosystem

On the software-as-a-service side, the cloud is the perfect way to host multiple apps and software tools that improve agents and broker productivity. One way to approach this is through the development of a real estate app store that includes a range of software, including CRM tools, lead generation software, open house apps and productivity tools, with everything hosted in the cloud.

In doing so, this creates an open ecosystem, where agents and brokers have a choice of software tools to use, including some apps developed in-house and others from third-party partners. The cloud enables an open ecosystem in which agents and brokers simply decide which apps they want to use from a menu of options available. This provides flexibility while also empowering personal choice and customized solutions for home buying and selling and beyond.

Convenience Is the New Normal

The Covid-19 pandemic has forced real estate companies to conduct more business remotely, with documents shared online. Some firms have been moving a greater number of transaction steps to the virtual realm, using cloud-based services to host and gather documents and collect signatures.

While some customers will continue to demand face-to-face contact with agents and brokers, a significant number will embrace the convenience of a mostly online, cloud-based approach.

The industry is already seeing great benefits from cloud computing. Expect many more advantages to reveal themselves as the industry continues to digitize its operations.

Too often, we see that the failure to innovate today equates to playing catch-up tomorrow. The benefits of cloud technologies for real estate services professionals are clear, and the obstacles of price and infrastructure are entirely surmountable.

Business and information technology leaders in this industry must look beyond outdated legacy systems and begin embracing the cloud — now.

Rizwan Akhtar is executive vice president, chief technology officer of business technology, at Realogy. Akhtar holds an M.S. in Computer Science from the University of South Asia and an MBA from the University of Phoenix.

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