B&N Nook: Taking On Amazon Head To Head

eBook wars continue.

Tomorrow, Barnes & Noble (B&N) is expected to announce its own B&N-branded eReader device--the Nook, as the Wall Street Journal reported this evening. The device is expected to be wireless and touch-operated, with dual screens--a 6" E Ink display for reading, and a smaller color LCD screen for navigation, video, and...ads? 

In other words, the B&N eReader could be a Kindle and an iPhone put together. 

I knew from conversations with my own sources that this would be a cool device, but I didn't expect that it would be priced, as the WSJ reports, at $259. This puts the Nook competing squarely with Amazon's Kindle 2--most likely with a razor thin margin, if any, for B&N. To steal market share from Amazon and make up for lost time, B&N is pricing the Nook as aggressively as possible.

Getting the price right is crucial to success in this emerging device market. As we published earlier this year, most consumers expect eReaders to be $99 or less. But we expected something in the range of $399, which would make the device competitive with the other touch + wireless eReaders on the market, the Sony Daily Edition and the iRex DR800SG, both of which will be sold at Best Buy among other retailers. Pricing the Nook a full $140 below these other devices sends a strong signal that B&N is focused on Amazon, not Sony, as competition.

What we'll be looking for in the press conference tomorrow is an indication of how the Nook will be distributed and marketed. B&N has assets Amazon doesn't have, including more than 700 retail stores in 50 states and massive marketing reach. B&N will need to use all the tools in its arsenal--merchandising it prominently in its stores, promoting it through advertising, email marketing, etc.--to make up for lost time since the Kindle's launch in 2007.

A reporter asked me recently, "Is Barnes & Noble too late?" Too late...for what? Too late to steal market share from Amazon? No. Too late to save its own cost-heavy business, which will see smaller revenues as eBooks grow as a proportion of sales? Sadly, yes. Ask any veteran of the digital media wars: It's hard to compete for digital dimes when you pay your brick-and-mortar rent in analog dollars.