Barnes and Noble's Nook Color Could Change E-Reader Game

Barnes & Noble's new full-color Nook could radically alter the e-reader market, pushing the devices to become more like Apple iPad-style tablet PCs.

Seeking to regain some momentum in the e-reader space, Barnes & Noble introduced its full-color Nook at a New York City event Oct. 26. In addition to the color screen, the new Nook includes features-most notably, Web surfing-that bring it more in line with a tablet PC. This raises the inevitable question: Does the Nook Color have a chance of toppling Amazon's Kindle from its No. 1 spot?

Some analysts see the Android-based Nook Color, which Barnes & Noble plans to ship Nov. 19, as radically changing the e-reader game.

"This move puts B&N ahead of both Amazon and Sony-the longtime holders of the No. 1 and No. 2 slots in the e-reader business," James McQuivey, an analyst with Forrester, wrote in an Oct. 26 posting on his corporate blog. "Not ahead in terms of device sales ... but ahead in terms of vision. Because one day, all e-readers will be tablets, just as all tablets are already e-readers." McQuivey estimates that the new Nook will sell "a few hundred thousand units" before the end of 2010.

McQuivey believes a tablet-reader hybrid represents the best direction for the e-reader industry. "Multi-touch interfaces have become the new standard," he wrote. "Color is beautiful and necessary." On top of that, publishers will welcome the chance to experiment with color formats, without the need to spend time and money developing iPad applications.

Contrast that with Amazon's Kindle strategy, which seems to revolve around keeping the traditional e-reader experience as "pure" as possible. In July, the online retailer introduced a third-generation Kindle with a higher-contrast e-ink screen, longer battery life, Wikipedia access, support for password-protected PDFs and a more lightweight body.

McQuivey believes the Kindle's lower price-$189 for the 3G-enabled version, as opposed to $249 for the Nook Color-will continue to pull new people into the e-reader market. That will help slow e-readers' transition from cheap, grayscale devices to full-color, and consumers already in the e-reader market could very well start gravitating toward more robust features and higher price-points.

"The new Nook is more likely to attract people already familiar with the market who are ready to move to a device that can satisfy deeper content longings," he wrote. "Those content longings will go beyond books, however, to include music and video, two staples of the iPad experience."

In McQuivey's vision, Nook users will "want to use the Android-based device to play games, check e-mail, and surf the Web, even if they primarily use it for consuming personal media."

"While the device won't unseat Amazon, it does throw down a gauntlet to Amazon and Sony both," McQuivey wrote. "Both of those companies could easily develop a tablet device focused on consumer media-and both have sufficient motivation to provide media beyond books. But I'm starting to doubt whether Amazon will rise to that challenge." In other words, Amazon may choose to focus more on software-such as its Kindle app for Android.

Others say the new Nook could radically alter the e-reader game.

"By expanding its offering to include a tablet reader with broader publishing distribution opportunities, Barnes & Noble may have elevated itself to the head of the class," Allen Weiner, an analyst with Gartner, wrote in an Oct. 26 posting on his corporate blog. "I would say that Apple's iPad suffers a blow as a digital publishing distributor competing head-to-head with a tablet reading device from a major bookseller."

How the Nook Color affects either the iPad or the Kindle remains to be seen. Amazon.com's recent television ad campaign seems more focused on drawing comparisons between the Kindle and tablet PCs, but it's not inconceivable that their marketing strategy could change to deal with a rising Nook threat. That is, unless Amazon decides to produce a full-color Kindle of its own.