Would Lopping Off Nook Biz Mean Lights Out for B&N?

The Kindle Fire may have singed Barnes & Noble’s Nook this holiday season. On Thursday, B&N lowered its fiscal 2012 forecast for Nook sales from US$1.8 billion to $1.5 billion. The company is also mulling a spinoff of its Nook e-reader business.

B&N’s share price dropped more than 20 percent on the news. The company has pushed a large investment into the production and sales of Nook e-reader devices, so the lowered forecast has investors worrying about the retailer’s ability to compete with Amazon’s Kindle e-reader.

Although B&N is in discussions with partners, publishers and retailers in international markets that may lead to a Nook expansion abroad, there is no assurance that the talks will end in a separation of the Nook digital business, and there is no timetable for the company to conclude its review of the matter.

The retailer expects a loss of up to $1.40 per share in the fiscal year ending in July, much worse than analysts’ average estimated loss of 63 cents. Barnes & Noble blamed increased investing in Nook and a smaller sales total of the Nook Simple Touch for the lower forecast.

B&N did not give out numbers but said total sales of Nook devices rose 70 percent during the holiday shopping season. Hardware accessories and digital content rose 43 percent, and store sales rose 2.5 percent to $1.2 billion. Barnes & Noble attributed that growth in part to the closing of one of its main rivals, Borders.

Spinning Off the One Good Unit

The Nook is a fine e-reader, by many accounts, but even though it’s a strong seller for Barnes & Noble, it hasn’t whipped up the frenzied interest enjoyed by Amazon’s Kindle Fire.

“My guess is Barnes & Noble took a huge hit this holiday season due to the wildly popular Amazon Kindle Fire,” Stephanie Ethier, senior analyst at In-Stat, told the E-Commerce Times. “For anyone looking for an iPad-alternative, it would be a choice between the Color Nook or the Kindle Fire.”

The Fire’s content and hardware offerings are quite compelling, she noted. “For $199, the Kindle Fire was a much better deal than the $249 Color Nook, so, the Fire won out last quarter. Also, Barnes & Noble was banking on better sales of its $99 Simple Touch. Today’s consumers are looking for more.”

Barnes & Noble may be losing its one growth driver, Ethier observed.

“If it spins off the Nook line, it would look a lot more like Borders,” she said, “and we know how well that went for Borders.”

High-Growth Unit

The Nook business is a different type of business than a bookstore. That may be part of the reason Barnes & Noble is considering spinning if off.

“Nook is a growth franchise for Barnes & Noble, based on its ability to provide a quality media consumption experience delivering its content, whether it be the written word, audio, or video,” Jeff Orr, group director of consumer research at ABI Research, told the E-Commerce Times.

The Nook represents a departure from the company’s retail book, game and toy-selling business, Orr noted.

“The current Nook products are only distributed within the United States through company-owned stores and retail partners,” he said.

Very Different Products

The Nook is an electronic product, which is a big departure from the traditional bookstore business model. Its product development and sales strategy require very different types of expertise.

“Developing hardware for the various Nook devices is a very different business than what has been Barnes & Noble’s core distribution aptitude,” said Orr. “ABI Research believes this wholly unique research and development investment is motivation for the company to examine options for separating or selling the Nook business.”

It is likely that Barnes & Noble will look to a strategy that focuses on content distribution to the Nook and other technology devices to promote the corporate brand, he suggested, without having to invest 100 percent in hardware development.

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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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