More than just an upgraded e-reader, analysts view the new full-color version of Barnes & Noble's Nook device as a worthy challenger to the iPad and other tablet computers. Unveiled Tuesday, the Nook Color goes beyond displaying printed content with features like a seven-inch touchscreen and the ability to watch video, browse Web sites, check email, and play games.
Those additions help the new Nook carve out a market niche somewhere between Amazon's less expensive, black-and-white Kindle and the more costly iPad. Forrester analyst James McQuivey, who has closely tracked the e-reader race, believes the latest Barnes & Noble device also signals where the entire category is headed.
"This move puts B&N ahead of both Amazon and Sony -- the longtime holders of the number 1 and number 2 slots in the eReader business," he wrote in an Oct. 26 blog post. "Not ahead in terms of device sales, because this new NOOK, priced at $249, will be likely to drive a few hundred thousand units before year-end. But ahead in terms of vision. Because one day, all eReaders will be tablets, just as all tablets are already eReaders."
He points to three key factors leading to the dominance of the tablet as e-reader: multitouch screens becoming a standard feature of devices, the necessity of color, and publishers' interest in experimenting with a color screen.
"NOOKcolor will offer an opportunity to put books that are already sold in color -- cookbooks, travel books, to name the most obvious -- in an eBookstore to find out how much people will pay for those, without having to get into the world of iPad app pricing and development," according to McQuivey.
With the Kindle, Amazon has stuck to its vision of the e-reader as a single-purpose device relying on grayscale, E-Ink technology to help reduce the glare and provide a better reading experience than tablet LCD screens. That approach has helped the Kindle capture about two-thirds of the e-reader and e-book market to date, with Sony's Reader and the Nook trailing well behind.
Without providing actual numbers, Amazon this week said unit sales of the reduced-price Kindle models (selling for $139 and $189) launched in July had already surpassed those of all Kindles sold in the fourth quarter of 2009. The final quarter is typically the busiest retail period of the year.
McQuivey doesn't expect the Nook Color or other tablet-e-reader hybrids to topple the Kindle immediately, especially with the recent release of the cheaper versions. "Instead, 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."
Gartner analyst Allen Weiner also sees the new Nook encroaching on the Apple tablet's turf. "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," he wrote in an Oct. 26 post . He points to Apple's lack of Flash support (though the Android-based Nook won't launch with Flash at launch either) and its restrictive developer policies as an advantage to Barnes & Noble in courting publishers for the Nook.
By offering a tablet reader for publishing everything from e-textbooks to digital magazine, "Barnes & Noble may have elevated themselves to the head of the class," he wrote.
McQuivey, who had backed the continued momentum of the Kindle despite the arrival of the iPad in April, now sounds less optimistic about its ability to withstand a new wave of competition. both Sony and Amazon could offer broader media tablets, "But I'm starting to doubt whether Amazon will rise to that challenge," noted the Forrester analyst.
For his part, Weiner isn't ready to count out the Web retailing giant, speculating that Amazon will yield on its devotion to a black-and-white screen. "Amazon's not saying, but it's safe to say the company has something up its sleeve and the smart money is on a color tablet device," he wrote.