That all made perfect sense, as long as you ignore how the other big companies operate. I'm serious... that's the plan I'd say they should follow too, but that's not what the successful companies are doing.
... and that's why we're all so shocked that they're even bothering to release a new model rather than dropping out of the e-Book business entirely.
Who all is in the e-book business these days?
* amazon, obviously. They're probably #1
* apple ibooks. They have no e-ink reader, but their ibook users won't buy another device for reading cause they love their ithing so much. I consider this a niche market, because no other hardware/platform is really going to win those users.
* B&N. I'm 99% sure they are either #2 or #3, and I haven't looked at any stats.
* Kobo? Or free apps and 3rd party or pirated books? Or the other e-ink readers that are hard to even find?
Why would B&N exit a market where they're in the top 3? That's still a HUGE volume. Any of the others would LOVE to have that extra share. It's enough for them to manage a profit from it, and any bit that Amazon doesn't get makes them more competitive, so it's win-win to keep it.
B&N has been out of the hardware business for several years, with the possible exception of their E-ink model.
Good. IMO, they never should have made their own tablet. The e-ink reader is the book market, and they can make a nice app for any and all tablets (which they already have). The e-ink competition is amazon, and a bunch of also rans.
Heck, their latest E-ink hardware was behind by two major versions on the day that it shipped.
Amazon doesn't even run Android on their E-ink hardware.
On the Fire tablets, Amazon doesn't support the normal app ecosystem (no google play, no gmail, no chrome, no firefox, no hangouts, no chromecast support, etc). AFAICT, you can't even make a bookmark onto the home screen, so you can't make a shortcut to the web versions of things. I'm VERY upset about that, cause I tried to make that a drop in replacement for some elder family members (the live support and cheap price with decent specs sold me on them... these shortcomings were downplayed by everyone I talked to, but now the tablets are unused junk).
GP mentioned B&N being a threat to both Microsoft and Amazon. If you look at microsofts competition in this market, it's essentially non-existant. I don't think they ever even had an e-ink reader, and if they had a book store, it was so insignificant that no one knows about it. Their updates and maintenance on their product lines has been pretty awful, with the exception of windows itself, where they went with the other extreme.
My point is, using the others as a model, B&N doesn't need to be a good company and provide lots of great support. It's sad.