By Preston Gralla
Barnes & Noble may be shopping its successful Nook business around not because the ereader is in trouble, but because it's become such a whopping success. Two potential suitors include Google and Microsoft -- and Google is clearly the better choice.
Yesterday Barnes & Noble reported its earnings, and company executives said that they are considering spinning off the Nook business, either entirely or in part.
There are two reasons for the possible spinoff. First is that the Nook business may be worth much more as an independent company or partially owned by Barnes & Noble. Second is that Barnes & Noble may find it hard to continue to spend the hundreds of millions of dollars annually required to continue to grow the Nook.
The New York Times notes that the NOOK has been able to gain almost 30% of the ereader market share in the two years since it was launched, despite the Kindle's head start. Doing that costs plenty of money; the Times notes that by one estimate Barnes & Noble spends between $200 and $250 million a year on the Nook.
Sales of the NOOK have been booming. The Wall Street Journal reports:
Barnes & Noble said device sales had risen 70% for the nine-week period ending Dec. 31, compared with the year-ago period. It said the Nook business is likely to notch $1.5 billion in sales in the current fiscal year, compared with $880 million a year earlier.
Now Barnes & Noble wants to cash in, or at least ensure that it can continue to grow the business. Barnes & Noble's chief executive William J. Lynch Jr. said in a statement yesterday:
"We see substantial value in what we've built with our Nook business in only two years, and we believe it’s the right time to investigate our options to unlock that value."
Translation: We'd like to get some cash right away for the Nook.
Spinning off the Nook entirely would be problematic, because one of its big sales drivers are the Nook boutiques in Barnes & Noble stores. So more likely is that part of the business will be sold to a much larger partner with deeper pockets.
The Wall Street Journal mentioned two potential buyers/partners: Google and Microsoft. Google is clearly the far better fit. To begin with, the Nook is based on Android. If Microsoft were to buy the Nook, it would never allow the tablet to remain Android-based, and would likely cook up some version of Windows to run it. Technical issues aside, doing that could destroy the Nook, because it would require so much time and energy, that money and time would be diverted from the more important tasks ahead for the Nook.
Given that Google creates Android, the Nook would be an ideal fit. But there are more reasons as well. Google is pushing into book-selling with Google Books, and the Nook would be an ideal way to jump into the market in a big way. And both Google Books and the Nook use the ePub electronic book format.
So don't be surprised if at some point during 2012 Google goes head to head against Amazon, pitting the Nook against the Kindle.
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