Not dead yet: Barnes & Noble says a new Nook Color tablet is coming

Barnes & Noble is jumping back into the tablet market later this year, with plans to refresh its outdated Nook tablet line.

CEO Michael Huseby said in a statement that Barnes & Noble will launch "a new Nook color device in early fiscal 2015." The company's 2014 fiscal year ends in late April, so the new Nook would likely arrive in the summer or early fall with help from "several world-class hardware partners related to device development."

Missing the boat

Unlike most tablet makers, Barnes & Noble did not update its Nook tablet line last year. Instead, the company tried to sell through its existing stock of Nook HD and HD+ tablets--both originally released in 2012--at reduced prices, while producing additional inventory from "previously acquired parts and components."

Getting back into the tablet game won't be easy for Barnes & Noble after taking a year off, especially because one of Nook's original selling points--low prices--has been matched by many other competitors. "When they launched the original Nook Color they were among the lower cost tablet options," said Ross Rubin, Principal Analyst for Reticle Research. "In the intervening years the pricing has just dropped through the floor on low cost tablets."

Indeed, without new hardware to compete with Apple, Amazon, Samsung, Google and other vendors, the Nook unit took a beating last quarter. Devices and accessory revenues dropped 58.2 percent year-over-year, and content revenues fell by 26.5 percent. The entire Nook segment's revenues fell by 50.4 percent.

How can the new Nook shine?

To stand out from the stuffed tablet crowd, Barnes & Noble could focus on screen quality and outdoor readability, which in the past have been strong points for Nook tablets, Rubin said. The company could also try to create innovative new services instead of just trying to match competitor's existing ones, as it did with Nook Video.

"Perhaps more partnerships with top-tier publications, or some kind of innovative service program, much like seen from [subscription e-book service] Oyster, might provide some kind of differentiation," Rubin said.

Huseby, who became CEO last July, has blamed Nook's struggles  on the previous management. Last August, he said the company overestimated demand for its products, and produced far too many devices. He also reversed an earlier decision to outsource tablet design, saying the company's in-house design team was not a major expense and would help Nook stay competitive, though Huseby's latest statement suggests the company will at least outsource some aspects of the Nook's development.