Nook lynch
William Lynch, President of Barnes and presents the new 'nook' digital reading device on October 20, 2009 in New York City. - 

Barnes & Noble announced on Tuesday that it's pulling out of the Nook manufacturing business and handing over production of its color touchscreen tablets to a third party.

The under-performing Nook tablet has dragged down the book chain's revenues, which dropped by 8.8 percent for the quarter. Overall Nook revenue dropped 34 percent since the same quarter last year.

"The Nook is definitely on life support or maybe they're just pulling the plug on them completely," says Laura Owen, a writer for the tech blog GigaOM.

She says that Barnes & Noble has had trouble competing with other tablets on the market like the iPad, iPad Mini, Kindle Fire and Google's Nexus 7.

"It's never really been clear why somebody would necessarily choose a Nook tablet over one of those other devices," she said.

"It does seem as if Barnes & Noble's e-readers, the Nook Touch and the Nook with GlowLight, are doing better and it at least sees enough of a future in those devices to keep making them for now. That seems to be where the customers are."

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