Barnes & Noble: Managing the E-book Revolution

Topics: E-book, Books, Amazon Kindle Pages: 6 (1735 words) Published: January 29, 2015
Rivalry and opportunities in E-Book
industry at the example of Barnes &
Noble`s management

Even as the internet was still in its rapid growth phase, the idea of electronic books was gaining popularity. The comsuming public was already familiar to the idea of downloading digital content in the form of MP3 music files. Big technology firms like Microsoft and Adobe were investing huge amounts in the industry`s future.The EBook sales grew enormously in the past few years, while the physical book sales declined. Rather, from 2009 to 2011, the sales increased from $166.9 million up to $969.9 million. Barnes & Noble is the largest retail bookseller in the United States, operates 691 bookstores in 50 staates. Barnes & Noble College Booksellers, a wholly-owned subsidiary of Barnes & Noble, also operates 641 college bookstores serving over 4.6 million students and faculty members at colleges and universities across the United States. The company conducts its online business through, one of the web's largest e-commerce sites, which also features more than two million titles in its NOOK Bookstore. Through Barnes & Noble’s NOOK eReading product offering, customers can buy and read digital books and content on the widest range of platforms, including NOOK devices, partner company products, and the most popular mobile and computing devices using free NOOK software. The company entered the E-Book market with launching the NOOK in 2010. All along their core business was on sales of physical books. In this time the company outlasted its long-time competitor Borders. The management of Barnes & Noble had realized its industry fundamentally changed by technological innovation, first by the rise of online retail just as the increased demand for E-Books. Today, Barnes & Noble now stood in an unfamiliar competitive space, faced with well-heeled competitors like Amazon, Apple, Google, Adobe and Sony. Consequently, the challenge for Barnes & Noble is to manage this strong rivalry by making the right strategic decisions.

In the early days of 2012 Barnes & Noble`s top management faced two key strategic decisions that would determine the firm`s future path. First, should they continue to operate both traditional and digital businesses under the same roof, or seperate the digital business so that it could raise its own capital and make business decisions independently? And second, did it make sense to continue to fight Amazon by pursuing a proprietary E-Book solution or should they seek to collaborate more with industry players, such as Apple or Google?

The first step to strengthen its position in global competition was a big deal. In 2012 Microsoft made a $300 million investment in new Barnes & Noble`s subsidiary, includes both digital business as well as its educational college business in exchange for equity and a share of revenue on E-Book and other digital content sales. With the new, major partner the company will battle with Amazon and other big players in the E-book industry. They call it a strategic partnership, with 17.6 percent share by Microsoft and Barnes and Noble takes 82.4 percent. The new subsidiary is officially named as NOOK Media LCC. Barnes & Noble hasn`t had the resourses to keep up with the global expansion of Amazon. While Barnes & Noble`s NOOK appeared with a 27 percent market share, Amazon holds 60 percent market share with their Kindle. Thus, Barnes & Noble decided to cooperate with a rich and powerful technology leader in future.

As part of the joint venture, the two parties have settled their patent ligitation, and the new subsidiary has a royalty-fee licence under Microsoft`s patents for the NOOK. One of the first benefits for customers is a NOOK application for Windows 8, which will extend the reach of Barnes & Noble’s digital bookstore by providing one of the worlds largest digital catalogues of E-Books, magazines and newspapers to a gazillion of Windows customers in the U.S. and internationally. The...
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