The NOOK segment, which consists of the company’s digital business (including Readers, digital content and accessories), had revenues of $311 million for the nine-week holiday period, decreasing 12.6% as compared to a year ago. Digital content sales increased 13.1%, while NOOK device unit sales declined during the holiday period as compared to the prior year. Digital content sales are defined to include digital books, digital newsstand, and the apps business.
“We entered the holiday with two great new products, NOOK HD and NOOK HD+, both highly rated media tablets of phenomenal quality,” said William Lynch, Chief Executive Officer of Barnes & Noble, Inc. “NOOK device sales got off to a good start over the Black Friday period, but then fell short of expectations for the balance of holiday. We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward.”
What’s killing Nook Media?
Here’s the laundry list:
1) Customer service sucks.
2) Customer service sucks.
3) Customer service sucks. After years of word spreading about this, it has finally come home to roost. Amazon makes news when their Customer Service sucks. Barnes & Noble makes news when its Customer Service actually satisfies someone. You’ve been doing it wrong at the most important point, Lynch!
4) Their mutant DRM that requires a credit card. This cuts off traditional Barnes & Noble customers who lack credit cards. This is not an insignificant point. You can’t even buy a Nook Media Gift Card and use it because the damn DRM requires a credit card. Even Sprint has recognized that in these money-depressed times, Pay As You Go is the way to go. Even Google doesn’t require a credit card for their Google Play Gift Cards. Nor does Kobo. Nor Apple.
5) They went bigger instead of smaller. They didn’t do a NookColor Mini — something as small and nearly as light as the eInk Nook — to compete against the iPad Mini. So the iPad Mini has ripped their face off.
6) They did not go full Android. They should have made both the new Nook HD and Nook HD+ full Android tablets, period. Their custom Nook UI could have been an added-value feature for readers while being full Android would have taken sales from the Kindle Fire and Nexus 7.
7) They’ve reached the walls of the box they made for themselves. Trying to lock people into B&N, ignoring traditional customers, acting like the money would always flow to them, all of these things are barriers they created.
How to fix these things?
1) Appoint three people as the face of Nook Media. And I mean people with names, not NookCares or any of that bullshit. Three people because business is now twenty-four hours a day and three people of eight-hour shifts. These are the people customers turn to by name when Shit Happens. These are the people who report to you, Lynch, about what Shit Is Happening and it Gets Fixed ASAP.
2) Drop the mutant DRM, period, no arguments. Do It Now. Today. Within the next hour send out a press release with a date it will happen and then Do It.
3) Send out a separate press release announcing an upcoming upgrade to the Nook HD and Nook HD+ that will turn them into Full Android tablets. Don’t worry about Google Play being missing. People can figure that out on their own. And don’t worry about losing digital sales. Get the hell out of your box.
We are examining the root cause of the December shortfall in sales, and will adjust our strategies accordingly going forward.
I’ve just given you the damn root causes — for free! — now get to work.
Or you can continue to die.
And, oh, if you’re thinking that Microsoft will be your savior, I’ve got one word for you that should scare you half to death: Nokia.