The news isn’t good for Barnes & Noble: CEO William Lynch has resigned, with no immediate plans to replace him. Lynch was notable for pushing Nook e-readers and tablets, which were meant to compete with Amazon’s Kindle portfolio. Now the company’s reportedly readjusting its corporate focus to its brick-and-mortar stores, which means the Nook’s days could be numbered—even if Barnes & Noble keeps the devices around, it may not devote the considerable resources needed to keep the hardware and software fresh.
Meanwhile, the U.S. Department of Justice has taken Apple to court over the alleged e-book price-fixing, after reaching out-of-court settlements with five publishers (HarperCollins Publishers LLC, Simon & Schuster, Hachette Book Group, Penguin Group, and MacMillian). “I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books,” U.S. District Judge Denise Cote said during a May 23 pretrial hearing, much to the consternation and dismay of Apple’s legal counsel, “and that the circumstantial evidence in this case, including the terms of the agreements, will confirm that.”
Apple co-founder Steve Jobs once insisted in emails to News Corp executive James Murdoch (son of Rupert Murdoch), that Amazon’s pricing was ultimately unsustainable. But that hasn’t stopped Amazon’s Kindle devices from carving out a significant portion of the e-reader market. The question now is, with the Nook seemingly in a death spiral and Apple tied up in litigation, is Amazon on the verge of completely dominating e-books?
Certainly there’s a substantial market to take: According to recent data from the Pew Internet & American Life Project, the number of Americans reading e-books has increased from 16 percent to 23 percent over the past year, even as readership of printed books has declined from 72 percent to 67 percent. The Pew study also suggested that roughly a quarter of Americans above the age of 16 own a tablet, up from 10 percent in late 2011; another 19 percent own an e-book reader such as the Kindle or Nook—a notable rise from 10 percent last year.
But the Nook might not fade away entirely: in May, rumors abounded (thanks in large part to TechCrunch) that Microsoft was willing to pay $1 billion for digital assets owned by Nook Media LLC. Microsoft already has a 17.6 percent stake in Nook, thanks to a $300 million investment in 2012, so such a move wouldn’t come as a total surprise. According to internal documents referenced by TechCrunch, Nook Media will terminate its Android-based tablet line by the end of its 2014 fiscal year, shifting attention to Nook-branded software on third-party devices.
So Nook could perpetuate, even as an app (backed by a significant bookstore) on Windows 8 and Apple iOS tablets. And however Apple’s current trial works out, it’s not as if the company will back out of the e-book space anytime soon. So there’s still the possibility that Amazon won’t win the e-reader wars outright—although at this current moment, the online retailer is sitting in a remarkably strong position.