B&N (like Amazon) loses money on every one of the low cost readers it sells. B&N (unlike Amazon) does not yet have the breadth of inventory that goes on a reader, but like Amazon, it does provide free books, every day and every week from new authors.
This looks like a simple business decision. The large-mart brick and mortar book vendor business is a failing model. If you have a product that is a money loser putting a drag on a financially imperiled business model, choices have to be made. They may have discovered they could not generate the e-book sales volume to offset the hardware costs. So, the ereader product becomes a drag on their B&M profitability (which isn't so great according to your link).
Too bad: I like the product, and the fact that is easily sincs to the library system is a major selling point. There is an active community of experts who understand the nuances of the hardware and software and who actively look for 'free books.'
I'm going over the MobileRead forums and the B&N Community to check out the buzz.
Only got A dimple, would have preferred 2!