Barnes and Noble released the first Nook e-reader in November 2009 for $259. It was the first time that an e-ink display was coupled with a small color LCD screen. It distinguished itself from the Kindle by allowing one to use the color touchscreen to navigate between menus and view things in full color. It had both WIFI and 3G.
From 2009 to late 2010, Barnes and Noble invested heavily in its online ecosystem. It formed relationships with major publishers through its bookstore business to ensure that B&N would have access to their digital wares and this, in turn, added more books to its online portfolio. B&N quickly attained over one million titles in the first year and captured 20% of the entire ebook market.
Eight weeks before Christmas in 2010, Barnes and Noble introduced the Nook Color. They sold millions of units in the months leading up to the holidays and sold 1 million ebooks on Christmas Day alone. They were the first big company to produce a six-inch full color Android Tablet that had its own customized user-interface. It was billed as an e-reader instead of a tablet.
The Nook Color sold more units than anything else Barnes and Noble has ever sold before in its 40 year history. The company made agreements with Best Buy and other big box retailers to put the products on the shelves. In early 2011, the Barnes and Noble App Store went live.
However, during Barnes & Noble's 2013 fiscal year, NOOK segment's revenue plummeted 16% to $780.4 million. Even though the sales of content on the NOOK jumped 16% between 2012 and 2013, the company suffered heavy losses from lower units sold and discounted prices. This resulted in Barnes & Noble booking a $511.8 million operating loss from the NOOK alone. This trend continued into 2014, with the segment's revenue falling 35% to $505.9 million. In comparison, Amazon’s Kindle fared remarkably well.
On June 5th 2014, Samsung and Barnes & Noble announced that the next Nook tablet will simply be a Galaxy Tab 4 with some B&N software. The 7-in Galaxy Tab 4 Nook would run Android, but the reading-centric UI would let you enjoy Barnes & Noble e-books. The tab would also include the Google Play Store.
On June 25th 2014, the bookstore chain announced that it was separating its NOOK segment from the rest of its operations. In response to the news, shares of company shot up to touch a new 52-week high.
This decision to separate the NOOK will could end poorly for the spun-off tech company in the face of competition from Amazon's Kindle. The situation would also have legal fallout from one-time business partner, Microsoft Word and Pearson, who is a partial owner of the firm's NOOK Media operations. In December 2014, B&N purchased the Microsoft shares of Nook, ending the partnership between the companies.
The Nook, for all intents and purposes, has failed as an e-reader. Faced with incredible competition from two giants, Apple and Amazon, the Nook was not able to keep being competitive and offer the range of services that Amazon and Apple are able to offer – like a connection to the Amazon store, or the quality of the iPad. The Nook was initially able to tap into a market in its early years; however, it was not kept up with the technology of the devices and the market that it caters. It seems like an uphill battle to fix the problems of the Nook, and it seems less likely as time goes on and Amazon and Apple better their products, that this will happen. Barnes and Noble seems to recognize this as it severs its relationship with the Nook. The Nook itself has morphed into a Samsung Galaxy Tab, and no longer existing as a book reader. Due to the lack of foresight, resources, creativity, and a competitive market, the Nook will not be able to catch up to Amazon and Apple.