Barnes & Noble to Lower Prices to Better Compete

To better compete with Amazon, Barnes & Noble is reducing the price of the Nook. “Barnes & Noble sales rise, launches cheaper Nook” by Phil Wahba of Reuters.com reports the company “lowered the price on its Nook Color e-reader to $169 from $199” and will introduce a Nook tablet that will cost $199. That new Nook will carry 8gb of memory, half of the current standard memory for their current tablet.

Along with the announced prices, the company reported increasing sales for the Nook business and printed business. The Nook business “rose 38% to $542 million during the holiday quarter… physical book sales at its 720 superstores rose 4.2% in the first holiday quarter since rival Borders Group shut down”. Barnes & Noble CEO William Lynch claimed yesterday that the company “now had 27 percent to 30 percent share of the U.S. digital books market”.

However, the company has previously admitted that the Nook business is costing too much.  Advertising and manufacturing is taking a toll on the company who recently (last month) stated they might spin off theNook into its own separate business or sell it. With a price cut, analyst Peter Wahlstrom is quoted stating “It’s hard to maintain the same profitability if you keep lowering prices”. 


It seems Barnes & Noble doesn't have the monetary ability to stay competitive in the tablet/e-reader market. Amazon is notorious for taking major price cuts to lure customers to their site for books and music, and it comes as no surprise that the company was able to sell the Kindle Fire at $199. On the contrary, Barnes & Noble doesn't have the financial capacity to keep their advertising at the level it is now and still manufacture tablets/e-readers. Reducing the Nook price might be great for customers but it won't help to increase profit.