Apple Inc. (AAPL), Microsoft Corporation (MSFT),, Inc. (AMZN), Barnes & Noble (BKS): In-App Purchases on Barnes & Noble, Inc. (NYSE:BKS)’s Nook: Will It Matter?

On Monday, Barnes & Noble, Inc. (NYSE:BKS) subsidiary Nook Media announced that it will soon bring in-app purchasing functionality to the company’s Nook devices, thanks to a partnership with privately held mobile-payment provider Fortumo.

Wait, they didn’t already have that?
To be sure, for many folks who’ve never used a Nook tablet, in-app purchases seemed like a foregone conclusion for a serious device hoping to compete in today’s crowded market.

After all, both, Inc. (NASDAQ:AMZN)‘s Kindle Fire and Apple Inc. (NASDAQ:AAPL)‘s iPhones and iPads have long used in-app purchasing as a way to not only draw in new developers through the promise of additional revenue streams, but also to supplement their own coffers through profit sharing arrangements. As a reminder, Apple and, Inc. (NASDAQ:AMZN) get to keep 30% of every in-app sale from the devices running their respective platforms.

With this in mind, it’s no wonder Barnes & Noble, Inc. (NYSE:BKS) has struggled to turn a profit from its Nook division, even after the huge confidence booster in the form of a $300 million infusion from Microsoft Corporation (NASDAQ:MSFT), which helped form Nook Media in 2011.

In fact, the struggling bookseller fell more than 6% in a single day last month, when it reversed its previous assertion that Nook revenue would be at least $3 billion this year. As a result, Barnes & Noble, Inc. (NYSE:BKS) also stated that its 2013 EBITDA loss from the Nook business will probably exceed even the $262 million loss it suffered last year.

How much longer can they keep this up?
Then again, core sales in Barnes & Noble, Inc. (NYSE:BKS)’s retail business took some of the sting away by actually exceeding their expectations in the most recent quarter, contributing to a 7% year-over-year growth in EBITDA. What’s more, Nook media is still managing to finance itself and had around $240 million in cash remaining as of last month. In addition, Microsoft Corporation (NASDAQ:MSFT)’s stake in the new company also included $180 million in revenue-sharing payments over three years as well as $125 million to help finance the Nook’s international expansion.

Can this move effectively supplement Barnes & Noble, Inc. (NYSE:BKS)’s efforts to right the Nook’s wrongs and — most importantly — slow Nook Media’s cash burn long enough to help the segment actually turn a profit?

Foolish final thoughts
Color me skeptical, but I’m not particularly optimistic for Nook’s future prospects, especially given the fierce competition it faces from the superior product ecosystems at, Inc. (NASDAQ:AMZN) and Apple Inc. (NASDAQ:AAPL).

When the rubber hits the road, then, I’m still convinced it’s only a matter of time until Barnes & Noble runs out of gas.

The article In-App Purchases on Barnes & Noble’s Nook: Will It Matter? originally appeared on

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends, Inc. (NASDAQ:AMZN) and Apple and owns shares of, Apple, and Microsoft Corporation (NASDAQ:MSFT).

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