In the massive new Barnes & Noble (BKS) superstore on Manhattan's Upper East Side, generous display space is devoted to baby blankets, Art Deco flight clocks, stationery and adult games like Risk and Stratego.

The eclectic merchandise, which has nothing to do with books, may be a glimpse into the future of Barnes & Noble Inc., the nation's largest book chain. For 40 years, Barnes & Noble has dominated bookstore retailing. In the 1970s it revolutionized publishing by championing discount hardcover best sellers. In the 1990s, it helped pioneer book superstores with selections so vast that they put many independent bookstores out of business.

Today it boasts 1,362 stores, including 719 superstores with 18.8 million square feet of retail space- the equivalent of 13 Yankee Stadiums. Each of the store had more than 150,000 books. In terms of e-books, the author claims that the arrival of Apple's iPad, has a huge implication for e-books. ITunes has more than 125 million customers and they represent a very wide potential for e-books.

Barnes and Noble was one of the first companies to have an e-reader, known as the Rocket e-book. It used to sell the e-book for $12.99, as compared to the hard cover book for $25. Though it could earn $12.50 for the hard cover book, it can only earn $3.90 from an e-book. Due to the poor response for e-books, it started abandoning the e-readers in 2003. However, four years later, Amazon introduced its Kindle e-reader, which picked up the interest among readers and it became very highly popular. Besides this, the other mistake Barnes and Noble made was not to upgrade its website for encouraging the sale of e-books. This was not the case for Amazon, which prepared itself for growth in the readers of e-books.

Required:

a) Discuss what aspects of Barnes and Noble's current structure puts it at risk for electronic books to become a significant portion of book sales?

b) Discuss what was Barnes and Noble's primary competitive advantage in a "paper book" world? How has this advantage been eliminated by e-books?

c) Suggest what event the authors might eventually view as the big turning point for e-books?

d) What amount does Barnes and noble earn on a $25 hardcover book? How much would it likely earn for an e-book version of the same title? What implication does this have for Barnes and Noble versus its competitors? Show your calculations.