How Windows Can Save the Barnes & Noble Nook

Barnes & Noble took a jump last week on news that something was finally happening -- is that going to be enough?

May 27, 2014 at 4:32PM

On Friday, Barnes & Noble (NYSE:BKS) made a marketing announcement that in Germany, on Windows 8.1, for a while, it would give away some free e-books and magazines. Customers can get a few freebies for downloading the Nook app onto their PC or tablet. It's a classic loss-leading sort of pitch, although there's very little loss in the new digital book age. Of course, the stock market was unmoved by this small gesture and -- no? The market was moved? Oh, I see -- the stock has jumped over 10% since Friday.

Investors are excited about this deal because it clarifies a path to success for the Nook. Microsoft's (NASDAQ:MSFT) continued commitment to the system seems to be the business's current saving grace. If Barnes & Noble change the face of its brand from the Nook tablet to the Nook app, it might grow the brand in a quicker and more efficient manner, relying on others to provide the tech that runs the app.

Take a look, it's in a Nook
Barnes & Noble has yet to make a big splash as a tech company. The Nook tablet received relatively solid reviews on launch, but its inability to keep pace with the iPad has made it an also-ran, at best. According to recent reports, Apple is still way out in front when it comes to tablets sold each quarter.

Instead of focusing on the hardware, Barnes & Noble's most recent decision seems to focus on making the Nook software and store the focus of the brand. That's a smart move, as the real money is in digital sales regardless of which device they end up on. While Apple made waves early on by locking customers into a physical and digital world, newer entrants to the market must realize that recreating the success of the iPod/iPad is unrealistic -- there are simply too many similar players.

The Nook is still sitting in the back seat, watching as the rest of Barnes & Noble cruises along. Last quarter, the Nook division lost $61.8 million before tax. That's not great, but it is better than the division had been doing. In the same quarter a year ago, for instance, the Nook division lost $190 million.

Nook potential
Despite its horrific results, the Nook does have a few things going for it. First and foremost has to be its ties to Microsoft. The software giant holds a 17% stake in the Nook division and it's still clearly interested in working with Barnes & Noble to make the Nook a success.

The second boon is the sheer size and continued existence of the Barnes & Noble retail store. While the company is pulling back on in-store Nook displays, it still provides users with free in-store borrowing, a place to buy accessories, and a constant reminder of the Nook brand to potential buyers.

Those two backings give the Nook a path to potential success we talked about earlier. By trying the free download idea out in a smaller market, Barnes & Noble can determine whether to roll it out in the U.S. That might open the door to a whole new set of users and customers who have no desire to own a Nook, but who want the reader functionality that the app provides. This is an excellent move for Barnes & Noble, and investors should look forward to seeing a similar tactic on domestic soil soon.

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Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple, Barnes & Noble, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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