Barnes & Noble unveils new e-book reader

updated 6:29 p.m. ET Oct. 20, 2009

NEW YORK - Barnes & Noble Inc. unveiled a new electronic-book reader Tuesday that will compete with Amazon.com's Kindle in a still-small arena where some see bookselling's future.

Closer to a printed book than its precursors in some respects, the "nook" allows users to lend their copies of electronic books to any friend who has installed Barnes & Noble's e-reader application on a mobile device or personal computer.

But the wireless nook, which runs on Google Inc.'s Android platform and comes with 2 gigabytes of memory built in, also can store and play MP3 files and photos.

The reader is available on Barnes & Noble's Web site for $259 — same as the recently reduced Kindle — and is to start shipping in November.

Author Malcolm Gladwell read from his best-seller "The Tipping Point" during a launch event Tuesday for the device in New York. The first 10,000 people to order a nook will get a free electronic copy of Gladwell's book.

The device comes with free wireless access in Barnes & Noble stores, where it will be displayed for sale.

Other features include a slot for adding up to 16 gigabytes more memory and a 3.5-inch color touch screen below the page display. Less than 5 inches wide and 8 inches tall and weighing 11.2 ounces, the nook is the size and weight of a paperback book, Barnes & Noble says.

E-book readers can serve as customer retention tools as much as anything because they display only versions of books provided by the company that sells the device.

The largest U.S. book store chain is only the latest company to enter the e-reader market, which Kindle has dominated since its 2007 launch. Sony has sold e-readers since 2006 and plans to launch a new version with a touch screen and wireless downloading capability via AT&T in December. Smaller companies IREX Technologies Inc. and Plastic Logic Ltd. also plan to offer e-readers soon.

So far, e-readership is small.

"Only 8 percent of the U.S. adult population bought one e-book in 2008," and most read them on PCs, said Michael Norris, senior analyst at research firm Simba Information. "So it's a device that is extremely important to everyone except 92 percent of American adults."

Still, the niche is growing fast in an industry that is slumping. Forrester Research predicts 3 million e-readers will sell in the U.S. in 2009, and twice as many in 2010.

Sales have been falling for years at Barnes & Noble and other brick-and-mortar booksellers — mainly chief rival Borders Inc., which sells Sony e-readers in some stores — as shoppers turn to online and discount booksellers. The recession also led consumers to slash their spending on discretionary items like books and music.

Barnes & Noble hopes the e-reader and the company's new e-bookstore, launched in July, will boost sales. The e-bookstore, which sells versions of books to read on smart phones and other mobile devices and most personal computers using the company's e-book application, offers 1 million books, including the more than half-million offered free by Google Inc., as well as magazines and newspapers.

Amazon.com offers about 350,000 e-books, and Sony offers about 600,000, including Google's free titles.

Barnes & Noble has the advantage that it can feature its e-reader in its stores, said Norris.

"If you buy something from Amazon, you can't touch it first," he said.

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