Barnes & Noble's Nook Woes May Prompt More to Try Tablets

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With Barnes & Noble in upheaval over losses in its digital reader division, consumers may wonder whether they should buy a Nook. But the better question, experts say, is whether an e-reader should be on the shopping list in the first place.

The company announced Monday that CEO William Lynch had resigned. That followed a fourth-quarter earnings report in which losses in the bookseller's Nook division more than doubled from the prior year, to $177 million.

Though Barnes & Noble did not immediately respond to requests for comment, it had said in June that it would continue making many Nook products. It said it would stop making the Nook HD tablet and instead plans to find a third party to make and sell co-branded Nook tablets.

"Consumers have the dominant major book reader defined in their collective minds, and that is the Kindle," said Alex Goldfayn, CEO of the Evangelist Marketing Institute. "This is Muhammad Ali versus a no-name challenger. It's not a fight Barnes & Noble is going to win."

Not that the dedicated e-reader is a booming market—more consumers want a tablet, which offer more functionality at increasingly lower prices, said Michael Norris, a senior analyst for Simba Information, a publishing market intelligence firm. "They want the best value," he said.

E-reader sales peaked in 2011 at 26.4 million, falling to 18.2 million in 2012, according to IDC. It projects sales to drop 14 percent each year through 2016. In comparison, the research firm forecast sales of tablet computers to jump 58.7 percent this year, to 229.3 million.

In addition to the hardware, e-book prices have been getting cheaper, giving sellers such as, Apple and Barnes & Noble more leeway to offer sales. That could make tablets, which offer e-reader apps for all three, as well as other competitors, more attractive as a way to capitalize on competition. (Most e-readers still cling to proprietary formats, limiting shoppers to one e-book store—or illegal cracks to free books to be read on a competing device.)

In the short term, at least, current Nook owners have no reason to worry.

"The entire infrastructure is pretty much intact," Norris said. People can still expect support for devices, and Barnes & Noble plans to continue expanding its catalog of e-book titles.

Even as sales dwindle, the Nook and other dedicated e-readers aren't likely to disappear, said Stephen Baker, vice president of industry analysis for NPD Group.

"E-readers provide a specialized device that appeals to a very specific range of consumers," he said, adding that those users also tend to be more avid readers than tablet owners, helping booksellers increase sales of digital titles.

By's Kelli B. Grant. Follow her on Twitter @KelliGrant.