• by Mark Walsh  @markfwal, October 9, 2009

With reports indicating Barnes & Noble is poised to throw its own e-reader into the ring, competition in the e-book market is about to get more intense.

B&N will introduce a device as soon as next month featuring a six-inch screen from digital-paper maker E-Ink Corp. with a touchscreen and a virtual keyboard, like that on the iPhone, according to a Wall Street Journal story Friday, citing sources close to the matter. It would also use a wireless connection to download books from the e-book store it launched in July.

Gizmodo separately reported that the B&N e-reader will be powered by Google's Android operating system, which would open the door to running mobile apps through a customized display. The bookseller already sells e-books that can be read on apps for the iPhone and Blackberry.

The long-rumored B&N device would also be distinct from the deals it has with e-reader manufacturers Plastic Logic and Irex to provide the virtual bookstore they'll use to sell e-books to customers.

The reports come on the heels of Amazon this week lowering the price of its entry-leve Kindle from $299 to $259 and enabling users to download content wirelessly worldwide. Sony's most inexpensive competing e-reader sells for $199.

Pricing for the B&N device remains a mystery, but it's likely to sell for quite a bit more than either of the cheapest Kindle or Sony device when it first hits store shelves. But if the retailer's forthcoming e-reader provides a credible alternative to the Kindle, its brick-and-mortar stores nationwide could prove a key advantage over online-only Amazon.

Unlike print books, e-readers require a significant investment and are still unfamiliar to most consumers. So giving people the chance to see, handle and possibly demo the devices before buying could be a big plus for B&N. But first the company has to show it can build a user-friendly e-reader.

Perhaps anticipating a B&N's device, Forrerster Research earlier this week upped its estimate of 2010 e-reader sales from 2 million to 3 million, predicting 900,000 will be sold during the holiday season.