The competition in the tablet market is fierce. The unproven 7-inch tablet space took off with the Amazon Kindle Fire and the Barnes & Noble Nook Tablet. With demand proven, Google weighed in with the Nexus 7 which really puts its two competitors in the shade. There’s a new Kindle Fire on the horizon, the iPad mini is a persistent rumor, and if Microsoft really did release the much larger Surface tablet for $200 it would surely turn a few heads.

Against that backdrop we have the news that Barnes & Noble financials only show 0.3 percent growth for the Nook. That includes sales of readers, tablets, digital content, and accessories. When you consider that growth in the tablet market is strong – according to IDC we’re talking about 25 million tablets shipped in the second quarter of 2012, compared to 15 million in the second quarter of 2011 – it’s clear that the Nook is not turning enough heads.

Barnes & Noble has been struggling with production issues. In the financials statement it said “Device sales declined for the quarter due to lower average selling prices and production scaling issues surrounding the popular newly launched Glowlight product resulting in unmet demand.”

In such a competitive space it cannot afford to have any “unmet demand” at all.

There are a couple of exciting developments in the works for Barnes & Noble. Firstly we have the NewCo spin-off which came out of the patent dispute with Microsoft. Barnes & Noble is creating a new company with an investment from Microsoft, but we’re not sure exactly what it will do. Apparently a Nook app for Windows 8 is on the cards. Could there be a Windows 8 Nook in the pipeline as well?

Launching the Nook in the UK is another move Barnes & Noble is making. Sadly they are missing the opportunity to get ahead of Amazon by releasing the Nook Tablet. It turns out that only the two Nook e-readers will go on sale in the UK. The Kindle has proven very popular, but Amazon is due to launch the Kindle Fire soon and demand is expected to be high.

Could be tough times ahead for Barnes & Noble and the Nook brand.

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