APRIL 30, 2012 ● Barns & Noble plans to spinoff its Nook tablet business into a separate company in order to better compete with Amazon.com’s Kindle products. To that end, Microsoft Corp. is investing $300 million into the new company, and will own 17.6%. The partners hope to speed up of the launch of the Nook bookstore worldwide, as well as intoducing more Nook e-readers and tablets on a faster basis. In related news, Target Stores said it will stop selling Kindles in its locations. The retailer is not happy with Amazon’s encouraging consumers to browse Target’s stores to “showroom” products and then compare prices online.
Impact: The Kindle Fire was Amazon’s response to the Nook and its sales soared during the holiday 2011 season. As of mid-2012, around half of Android tablet devices sold were Kindles. The Nook has the potential to be a very competitive product with some investment. Amazon is of course a powerhouse, but Target pulling out is an example of a potential Achilles heel. While Barnes and Noble is a retailer, Amazon competes directly with ALL major retailers with a much deeper product line. Target finally realized that by selling a Kindle they were selling a device that could help put them out of business. It will be interesting to see if other retailers like Best Buy follow suit.
