William Lynch, chief executive of Barnes & Noble Inc., displays the Nook HD+, left, and Nook HD tablet computers in a 2012 file photo. (Michelle McLoughlin/VIA BLOOMBERG)

Barnes and Noble said Tuesday that it will stop making Nook tablets in-house and look for manufacturing partners for the devices. While the firm will continue to develop and make e-ink readers, it will no longer make its own devices to vie for the growing but crowded tablet market.

The news came along with a rough earnings report for the bookseller, which first announced that it would try its hand at the tablet market just two years ago. Despite efforts to prop up the Nook line with lower prices, the Nook department’s revenues fell by 16.8 percent to $776 million.

The sales drop, Barnes and Noble said, was in part due the strong e-book success it saw last year thanks to the Hunger Games and Fifty Shades of Grey trilogies last year, but also due to a “device sales shortfall.”

The firm said, therefore, that it will cut its losses by no longer manufacturing its color tablets.

“The widely popular lines of Simple Touch and Glowlight products will continue to be developed in house,” the company said in a statement Tuesday. “[The] company’s tablet line will be co-branded with yet to be announced third party manufacturers of consumer electronics products.”

The decision shows that while the tablet market is growing — Gartner recently reported that it expects the market will sell 2.35 billion units in 2013, representing a 5.9 percent increase over 2012 — it’s still very hard to get customers to pick anything other than Apple’s iPad, a Kindle Fire, or an Android-based tablet made by a firm like Samsung or Google itself.

Even with a wide variety of e-book content, particularly for children, and a growing video service launched in September, Barnes and Noble was still simply not in the position to stand against the extensive app stores and content partnerships secured by Apple, Amazon or Google.

The company said it will continue selling Nook tablets throughout the holiday season and will also continue to add to its catalog of digital content for e-readers.

“The company intends to continue to build its digital catalog, adding thousands of eBooks every week, and launching new NOOK Apps” for competitors’ devices, the firm said. 

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VentureBeat: Tablet sales expected to soar in 2013, pushing PCs to edge of oblivion

Barnes and Noble releases new Nook tablets

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