Nook Gives Some Insight Into Demand for 7-Inch Tablets

By Matthew Lynley

Amazon is notoriously silent about sales of its Kindle tablet, and there still isn’t a lot of information from Google on the success of its Nexus 7 tablet yet either.

So, basically all there is to go on to gauge the success of 7-inch tablets is an earlier report from The WSJ that suggests Google is selling around 1 million Nexus 7 tablets a month.

Now there’s a little more to go on, with Barnes & Noble releasing data for sales of its NOOK segment — which includes readers, but also digital content and accessories. In its most recent operating quarter, Barnes & Noble reported $160 million in revenue for the segment, up 6% from a year ago. That did not include its newer Nook HD and Nook HD+ tablets, which began shipping after the close of the quarter.

As Apple CEO Tim Cook and others have noted, tablet sales can become depressed as consumers anticipate newer devices. So that might have also played a role in the final outcome for Barnes & Noble’s Nook segment.

Even if the $160 million indicated below was all tablet sales, that would suggest Barnes & Noble sold up to around 1 million tablets — at least if that were for the cheaper Nook Tablet, which costs $159. The actual number is probably much lower than that, given that the segment includes digital sales and other Nook readers (not all of which are tablets).

Apple has been notoriously opposed to the idea of a 7-inch tablet — even though it recently released the 7.9-inch iPad Mini. The explanation at the time was that the longer length and resolution makes the iPad Mini a superior tablet compared with 7-inch tablets.

Here’s the bit from the earnings release, bolded emphasis ours:

The NOOK segment, which consists of the company’s digital business (including Readers, digital content and accessories), had revenues of $160 million for the quarter, increasing 6% as compared to a year ago.  Digital content sales increased 38% for the second quarter over the second quarter in the prior year.  Digital content sales are defined to include digital books, digital newsstand, and the apps business.  The two new NOOK devices, NOOK HD and NOOK HD+, began shipping after the close of the company’s fiscal second quarter,  and sales from the launch of those products will be reflected in the current fiscal third quarter and subsequent quarters.

NOOK EBITDA losses were essentially flat, increasing by 1% over the prior year to $51.4 million, as margin improvements were offset by higher investments primarily in product development and international expansion.

Portia De Rossi Anne Archer