Will Samsung Save Barnes & Noble’s Nook?

Barnes & Noble and Samsung have collaborated on a new device to challenge Amazon's Kindle Fire.

Aug 22, 2014 at 9:00AM

Barnes & Noble's (NYSE:BKS) newest tablet is a Nook in name only. After revealing last year that it planned to exit the hardware business, Barnes & Noble and Samsung (NASDAQOTH:SSNLF) announced a new partnership on Wednesday.

The Galaxy Tab 4 Nook is a rebranded version of Samsung's existing Galaxy Tab 4. In terms of hardware, it's identical, with the exact same components and build materials. The difference, rather, is software-based, with the Nook edition of Samsung's tablet pre-loaded with Barnes & Noble's reading apps and Android software.

With Amazon (NASDAQ:AMZN) looming large, can Barnes & Noble's partnership with Samsung reverse the Nook's fortune?

Galaxy Tab 4 Nook vs the Kindle Fire HDX
In a broad sense, the Galaxy Tab 4 Nook will compete with numerous tablets, including countless Android-powered slabs and the iPad Mini. Its most direct competition, however, appears to be Amazon's Kindle Fire HD.

Samsung's Galaxy Tab 4 Nook, at $179, is slightly more expensive than Amazon's $154 7-inch Kindle Fire HD (at $139, the ad-supported version is even cheaper). Screen size, storage and resolution are identical, though Samsung's tablet is a bit more powerful, with a slightly beefier quad-core processor compared to the dual-core chip in Amazon's Kindle Fire HD. But the largest and most obvious difference between the two devices is software: The Galaxy Tab 4 Nook is a standard Android tablet augmented with Barnes & Noble's Nook apps. The Kindle Fire HD runs Amazon's heavily modified version of Android, Fire OS.

Users of Samsung's tablet, then, can access the Play store. They can even download Amazon's Kindle app, and read digital Kindle books instead of Nook books should they so desire. Amazon's Fire HD, in contrast, is heavily locked down, and unless users are willing to do some significant tinkering, owners of Amazon's tablet must purchase their media from Amazon's digital storefront.

Samsung's ecosystem envy
This isn't the first deal Samsung has made with a digital book seller: Earlier this year, it announced a partnership with Amazon, unveiling custom version of Amazon's Kindle app exclusive to owners of Samsung's Galaxy devices. Owners of Samsung's Galaxy tablets and smartphones can, if they use Amazon's custom app, receive one free Kindle book each. It's a small perk, but a perk nonetheless, and could keep Samsung's customers loyal to its devices over time.

Samsung's major mobile competitor, Apple, has been relatively successful when it comes to digital book sales, capturing roughly one-fifth of the market. That's less than Amazon, but close to Barnes & Noble, though exact market share data is unavailable.

iBooks purchased through Apple's digital storefront are locked to Apple's devices, and are largely inaccessible on devices made by its competitors. Samsung has nothing comparable, though its recent actions suggest that it is definitely interested in the digital book space.

Books purchased through Barnes & Noble's digital storefront would bolster the bookseller's ecosystem -- not Samsung's. But Barnes & Noble plans to spin-off its Nook division by early 2015. A subsequent acquisition would make sense -- reports in the past have indicated that other tech giants are interested.

Samsung knows how to make a tablet
Even if Barnes & Noble's Nook remains independent, Samsung's tablet expertise should help. Despite some early promise, Barnes & Noble has never captured a meaningful share of the tablet market. Samsung, in contrast, has seen its tablet business grow significantly in recent years, and is now the second-largest tablet vendor in the world by a wide margin.

The Galaxy Tab 4 Nook is not a revolutionary device, but is competitive for its space. Although the 7-inch Android tablet market is crowded, Barnes & Noble's latest Nook is better than it has ever been.

Leaked: Apple's next smart device (warning, it may shock you)
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Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com, Apple, and Barnes & Noble. 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.

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Jun 12, 2015 at 5:01PM

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