Is B&N Divestiture the Pathway to Samsung?

With the recent news of Samsung taking over development of Barnes & Noble Nook Media tablets, followed by the news this week of the coming divestiture of B&N Retail from B&N Nook Media, might this all be leading to a solution to problems for both Samsung and Barnes & Noble?

Let’s start with B&N Retail, who once free of the Nook Media relationship can surely find better ways to maximize profitability from that current floor space and drive increased store traffic. Possibly they will want to sell a more diverse selection of tablets and smartphones. Possibly high-level corporate pressure will temper the difficult negotiations likely to occur so a sensible B&N overall brand strategy is followed.

But NOOK Media will not want to overpay for that prime retail space given their current difficulties and so a significant reset of that valuable floor space seems likely, especially given it is front and center in many locations, prime real estate. How many more print books might they actually be selling in that space right now if it were available?

What NOOK Media needs most is available via Samsung, whose tablet and smartphone lineup gains them access to Best Buy, Staples, AT&T, Verizon, and more, amounting to several thousand more storefronts located in the places people already shop for tech.

Samsung, on the other hand, made a weak attempt to establish their own branded ebook storefront but are too late to that game, a game in which even Apple is struggling competing against Amazon. So the B&N NOOK Media group would potentially offer Samsung the second largest database of ebook buyers after Amazon. Chances are many of these customers have zero (or worse) brand affinity toward Amazon, so they are not likely to leave if given better hardware than what they have gotten from B&N in the past. And many prefer their Nook models dedicated to reading over multi-purpose “distraction-easy” tablets.

That better hardware will start soon as the strategic partnership rolls out. Assuming it is going well, which I believe will be the case, then the divestiture to follow opens the door for Samsung to outright buy Nook Media, leaving B&N Retail Founder Leonard Riggio free to resume running the retail business he loves so dearly. As well as gain from the Nook Media sale. Which from a brand standpoint is a great reason why B&N came up with the NOOK name, because it is an excellent ebook product brand name and can be carried forward under any other larger brand umbrella.

I do not own shares in any of these companies and am just an interested industry observer speculating off in the wings. I appreciate your comments.

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