Friday, December 28, 2012

Pearson: Is Nook Investment Wise Dot Com?

It’s great that publishers occasionally back technology start ups and invest hard cash. It’s often easier for them easier to ‘sit on the fence’ and wait to see who wins, but by backing technology with cash and commitment it could be said that they are supporting, shaping and developing their future and not merely waiting for someone to do it for them.
We have seen recent publisher investments in self publishing, an area previously shunned and derided by the same people. Self publishing is hardly new, but clearly is potentially very different in a digital environment and offers both the author and reader new opportunities that hardly existed in the physical world.
Now Pearson has purchased a 5% stake in Barnes & Noble's Nook Media division for what would appear a significant $89.5 million.
We ask why, why now and is it 'wise dot com'?
Nook is hardly state of the art technology, nor is it a global device, or even a market leading store offer in its own back yard. Nook Media also faces many challenges ahead on its; relationships, technology, store offer and some would suggest that a 5% stake is hardly going to shake the tree, especially if Pearson is the lone publisher investor.
The relationship with Microsoft is somewhat unclear as Microsoft pin their future on Windows 8 and RT and their own Surface range. Nook has made it abroad, but is often seen as 'that other Kindle' in a market that has killed off many pretenders before it. Technology prices are tumbling and devices continue to consolidate and the Nook only competes in the shrinking ereader and tablet worlds and has no smartphone or higher spec ultrabook offers. Can Nook really compete with the technology giants across such a narrow range and given their shallow pockets?
The Nook, or B&N store, is just another ebook store with little social or discovery pull and importantly it can't leverage what the consumer doesn’t know outside of the US – the Barnes and Noble brand.
We all know that Nook needs the cash, but why now, why Pearson and why only 5%?
The merger of Penguin and Random House makes the move now more confusing and suggests that the play may be more about education and academic than trade. However, Pearson has other investments in this area and a Nook Media offer could be confusing to their Coursesmart partners.
Perhaps, we shall so discover the logic of the investment, but in the meantime B&N will be grateful for some seasonal support, cheer and investment.

1 comment:

Nate said...

Pearson also has the option f picking up another 5% for another 90 million. That detail was in the SEC filing: