Barnes & Noble’s Reply to Kindle to Debut in 2010

Plastic Logic e-book reader
Plastic Logic E-Reader device. Source: Plastic Logic
Click to enlarge.

Barnes & Noble is aiming to challenge rival head-on in e-books, this week announcing its answer to Amazon’s Kindle e-book reader and opening a digital bookstore that supports the iPhone, iPod Touch, BlackBerry and PCs.

The largest U.S. book retailer said its new e-bookstore offers more than 700,000 digital titles, with bestsellers priced at $9.99. It also made bold statements about soon including “well over 1 million titles within the next year, inclusive of every available e-book from every book publisher and every available e-book original.”

Barnes & Noble (NYSE:BKS), in a partnership with hardware vendor Plastic Logic, will also be the exclusive e-bookstore for the Plastic Logic e-reader, due out in early 2010. The wireless device is aimed at business professionals and will be 8.5-by-11 inches.

“Today marks the first phase of our digital strategy, which is rooted in the belief that readers should have access to the books in their digital library from any device, from anywhere, at any time,” President William J. Lynch said in a statement. “Our goal at Barnes & Noble is to build a service that revolves around the customer, enabling them to have access to hundreds of thousands of titles and read on their smartphone, PC, and many other existing and future devices. We want to make e-books simple, accessible, affordable and convenient for everyone.”

The e-bookstore also includes more than a half-million public domain books from Google, which can be downloaded for free, according to B&N.

An upgraded version of the company’s eReader application, which was part of the company’s Fictionwise acquisition earlier this year, is also out now. This device-agnostic e-book application supports both wireless and wired access to the new Barnes & Noble eBookstore, and is currently offered for iPhones, Research in Motion’s BlackBerry and most computers.

The news comes at a time when the digital book battle is heating up, with Amazon (NASDAQ: AMZN) this year unveiling its Kindle 2 e-book reader, followed in June by a large-screen version, the Kindle DX, designed for newspapers and textbooks.

Amazon also recently scooped up Lexcycle, the maker of the most popular iPhone e-reader app in a bid to further boost its position in the e-book market.

Can B&N and its forthcoming device become a viable contender to Amazon? That may depend on the as-yet-unannounced pricing of the new e-reader, analysts said.

“At the very least, it has to be price-competitive with the Kindle and the Sony eBook reader,” Tim Bajarin, principal analyst of Creative Strategies, told

In early July, cut the price of its standard Kindle model by 17 percent to $299. The large-screen Kindle DX remains at $489. The most recent versions of the Sony eBook readers carry prices of $299 and $279, according to Sony’s Web site.

“If B&N creates one that undercuts these two, they could get a lot of attention and become a solid alternative quickly,” Bajarin said. “There is room for another e-book (in the market) branded by a big book retailer like B&N, and if priced right, it could be successful.”

Forrester analyst Sarah Rotman Epps said Plastic Logic may have difficulties offering competitive pricing in coming years.

“The race is on now for products to get to $199, which we expect to happen by Q3 2010, and then to $99, which we expect to happen by 2012,” Epps told “Plastic Logic has enormous costs to overcome since it built its own factory for manufacturing, rather than relying on an existing manufacturer. In the long run, it may be cheaper, but in the short term, it will be difficult for them to price their products to be competitive.”

She also thinks the book retailer’s claim of reaching 1 million titles is realistic, though largely due to titles in the public domain. Amazon currently has 330,000.

“B&N claims to have 700,000 e-books now, which includes the 500,000 free Google books,” she said. “That means B&N has 200,000 of its own titles, versus Amazon’s 330,000. The top six publishers alone supply about 50,000 e-book titles; getting the top 200 publishers on board, in addition to the Google books, would get B&N to 1 million. So it’s not impossible or unlikely that they will reach that goal.”

Bajarin and Epps also also lauded the company’s strategy of supporting multiple formats.

“This is a smart idea since their goal should be to become a digital book distributor and not get into the hardware business in the long run,” Bajarin said.

Epps added that B&N is smart to bet on growth of the entire category of digital reading, rather than just the growth of one category of devices, as is Amazon’s strategy.

Size-wise, the Plastic Logic reader will come in between the Kindle 2 and DX. Bajarin thinks over time we’ll see e-book readers in multiple sizes as the market matures.

Epps said that book buyers — who represent the largest market for e-book readers — typically prefer smaller form factors.

“Some consumers may prefer a larger device that’s better optimized for reading newspapers and magazines, but our data shows that book-buyers drive the market,” she said. “Purchases of other types of content occur after consumers own a device, but they don’t drive purchase decisions.”

Epps cited a recent Forrester survey that found that 50 percent of U.S. adults online said they are interested in reading books on e-readers, compared to 36 percent who are interested in reading magazines and 33 percent interested in reading newspapers on the devices.

It’s not surprising that both Amazon and Barnes & Noble, along with other competitors like Sony, are moving fast into the sector. E-book shipments are slated to increase, with worldwide shipments expected to grow from almost 1 million units in 2008 to close to 30 million units in 2013, according In-Stat, which cites Amazon as the leader with its Kindle lineup, due to its wireless content delivery service.

Update adds comments from Epps.

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