Barnes & Noble plots new chapter by splitting Nook, retail store businesses

nook tablet

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After mulling over the idea two years ago, Barnes & Noble is saying once again that it wants to separate the Nook business from its brick-and-mortar retail shops. The bookseller announced on Wednesday that it intends to create two separate public companies: one for the Nook and one for everything else including the retail shops. The transition is expected to be finished during the first three months of 2015.

Barnes & Noble

The company cautions that while it has the blessing of its board of directors, the split could be canceled or delayed depending on market conditions. That is likely just a legalistic warning, however, as this time around the Nook separation seems like the real deal.

Splitting off the Nook business is the latest chapter in Barnes & Noble's ongoing saga to compete with technology giants like Amazon, Apple, and Google.

With its lineup of Kindle readers and Kindle Fire tablets, Amazon is the Nook's closest competitor. While Amazon continues to grow its Kindle platform, Barnes & Noble's Nook business, which Microsoft bought a stake in two years ago, has struggled of late.

Nook business fell by more than 35 percent during Barnes & Noble's fiscal year, which ended on May 3. Over the past year, the company has also seem confused about the best strategy for Nook tablets.

In June 2013, the company said it would partner with third parties to design Nook tablets. But two months later, in August, the company reversed course and said it would continue making its own tablets in-house.

But that all changed just a few weeks ago after Barnes & Noble announced plans to partner with Samsung to make a co-branded Galaxy Tab 4 Nook.

With the company trying to figure out what to do with its tablets, Barnes & Noble has also been busy slashing e-book reader prices to better compete with the likes of Amazon.

Then there's the Microsoft-Barnes & Noble deal from 2012 that was supposed to bolster the Nook as it battled the Kindle. Two years later, however, and all we have to show for this glorious partnership are Nook apps for Windows 8.1 and Windows Phone 8 that look like they're about to be mothballed in favor of Microsoft's own reading apps.

The good news is the struggling Nook platform may have a better chance on its own. A digital-only company that works closely with, but is not ruled by, a physical retail chain can better focus on creating first-class tablet and e-reading experiences. And still have the backing of a major, nationwide distribution channel.

If all else fails, a separate Nook business might be an easier acquisition target for a larger company such as Microsoft--a company that was rumored to be looking at a Nook acquisition just last May.

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