The Death of Barnes and Noble

Recent news regarding the leadership decisions taking place in Barnes and Nobel leads me to believe that the chain is now officially dead:

For the last several years there’s been a battle for Barnes & Noble’s soul. In one corner stood 72-year-old chairman and founder Leonard Riggio. A legend in retail, Riggio has been fighting to keep the chain focused on stores rather than jumping into the e-reader tablet wars.

Though he still owns 30% of the company’s stock, Riggio had been pushed to the side strategically in favor of former computer hardware executive and now-ex CEO William Lynch. It was Lynch who drove the company’s costly expansion into handheld Nook readers.

Last night Riggio emerged victorious when Barnes & Noble announced Lynch’s immediate resignation. Overnight Riggio went from figurehead Chairman to unquestioned king. All other executives at Barnes & Noble will now report directly to him and the company says it has no immediate plans to find a new CEO to replace Lynch.

The final nail in Lynch’s coffin was in late June when Barnes & Noble reported a staggering $477 million loss on Nooks and announced that it would be outsourcing the manufacturing of future e-readers. As discussed on Breakout at the time, the Nook debacle strengthened the hand of Barnes & Noble’s founder Leonard Riggio and his push to keep the company focused on the chain’s 675 stores.

History has not been kind to companies that try to maintain the old way of doing things when a new way has established itself. Buggy manufacturers didn’t do so well when automobiles began permeating society, business for typewriter manufacturers didn’t boom after the introduction of affordable personal computers, and traditional bookstores aren’t going to find their coffers filled with cash now that e-books have become popular.

While Barnes and Noble’s Nook division hasn’t been bringing the company profits the correct response isn’t to shift the company towards a dying model. Sure, losses will go down in the immediacy but as time goes on and Barnes and Noble focuses on heavy, space consuming dead tree books the company will become less and less relevant. But in the long run Barnes and Nobel will become irrelevant if it attempts to continue its old model.

We’re at the beginning of a new era where the cost of personal electronics has decreased to a point where it is viable to replace physical books with electronic books and e-readers. Trying to prop up the old model is a recipe for irrelevancy. Those wanting physical books will become a small minority that won’t be capable of maintaining Barnes and Noble’s currently large presence.

One thought on “The Death of Barnes and Noble”

  1. I don’t think they are completely abandoning the e-publishing just the hardware building side with lots of risk. They built the superior product and have the superior software but they attempted to do battle with the undisputed king of e-commerce and while competitive could never make up for the lack of market penetration. Now by licensing the nooks to third party manufacturers they can get rid of the most costly portion of the business with the thinnest profit margins.

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