Nook HD

NOOK look at co-branding Android tablets

Barnes & Noble is busy planning its next generation a NOOK ereaders. The past two years has been tough for the company, which has struggled to establish itself as a profitable digital content provider.

Despite NOOK’s difficulties, it appears unlikely to suffer an imminent demise. As predicted by Android Wafer back in August last year, Barnes & Noble is investigating the possibility of working with a major device manufacturer to co-brand future NOOK tablets.

Speaking to The Wall Street Journal, new Banes & Noble CEO Michael Huseby stressed that the company must continue to sell its own hardware, if it is to succeed in the future.

“Your best chance of success for selling digital content is on your own dedicated devices which have your brand or a co-brand on them,” Huseby said. “That’s why we’re dedicated to providing those devices in both black and white and colour.”

“If we can leverage an outside partnership to help us with devices, we will do that.”

It would be easy to accuse Huseby of perpetuating his company’s problems by refusing to abandon a strategy that has already failed.

The problem for Barnes & Noble has not been selling its own hardware per se, but selling its own hardware without incurring substantial losses. And the magnitude of this difficultly has been acknowledged by Huseby, with the CEO telling the WSJ that his company now recognises that it won’t be able to go toe-to-toe with the likes of Apple.

Technology itself could help Barnes & Noble to overcome this obstacle. Unlike when the NOOK HD and NOOK HD+ were launched back in November 2012, cut-price budget tablets are starting to meet the performance expectations of the mass market.

So even if NOOK does not pursue the co-branding route, and instead works with an OEM to release its next generation of hardware, future products won’t have the same negative impact on Barnes & Noble’s margins.

It is therefore possible Barnes & Noble may decide on outsourcing rather than partnership – albeit with a more generic end product than either the NOOK HD or NOOK HD+ – sacrificing substantial – but costly – levels of influence over the design process.

However, Barnes & Noble’s strengths lie with its immense retail presence. And walking into any of its stores, one of the most noticeable features is the sizable display of NOOK products.

The formidable retail space of Barnes & Noble would be hugely valuable to any Android tablet manufacturer, locked in a fierce battle for market share. Add to this the UK partnerships the company has developed, with retailers like Argos, John Lewis and Sainsbury’s, and its not hard to see a co-branding strategy could prove mutually beneficial to both retailer and manufacturer.

A co-branding partnership could see an Android tablet manufacturer gain access to prominent, well-designed retail space in both the USA and the UK. In return, Barnes & Noble would receive a discount on the hardware, allowing it to be priced competitively against rivals Amazon and Kobo.

[via WSJ]