My thoughts today are about profit pools and Barnes and Noble’s idea of spinning off the Nook e-Reader part of its business. First off a profit fool is where a company looks at its services and looks for high profit areas and expands on them to gain greater profits. Currently, Barnes and Noble is facing financial difficulties and is looking to raise cash in order to fund “other operations”. In order to raise the cash that they want Barnes and Noble is looking to sell their e-Reader business. I believe that if Barnes and Noble were to spin off this part of their business that they would lose the opportunity that the e-Reader profit pool provides.
I think that e-Readers provide a huge profit pool especially for a brick and mortar store like Barnes and Noble. No other e-Reader has a store where you can browse through books. Kindle provides all their material digitally and Apple does not have hard copies of book available in their stores. Barnes and Noble could make special offers such as buy a hard copy of a book and get a digital copy for a nominal cost $1-$5. Because of the relatively small cost it take to obtain a digital copy of a book, this extra service would have very high profit margins. This is something that other e-Reader services would not be able to offer. This is just one of many promotions or deals that could take advantage of the brick and mortar stores as well as e-Readers and digital content that Barnes and Noble can provide.
