Barnes & Noble's New Nook Color: Comfortably Mainstream

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Barnes & Noble (BKS) didn't unveil their new Nook color reader with the kind of fanfare that Apple (AAPL) cultivated for the introduction of the iPad back in January. But then again, the largest book retailer in the country didn't tease gadget geeks and industry pundits with months of near-orgasmic hype promising to save media industries and revolutionize the very way we consume media.

Instead, the formal unveiling of B&N's new touchscreen color reader -- priced at $249 and shipping as of November 19 -- was greeted with skepticism. As an e-reader, the Nook has been an also-ran compared to Amazon's (AMZN) Kindle, which still dominates the e-book reader market (even if the company prefers to release meaningless statistics instead of hard data). It seemed inevitable that the new device would pale in comparison to the iPad, which has sold more than 4 million units since its April launch.

An E-Reader Apart

B&N hopes to find the middle ground. And while it's too early to tell if this centrist positioning derived from strategic strength or competitive weakness, a number of factors suggest the company did, in fact, have some rabbits up its sleeve -- and that Barnes & Noble may have a fighting chance to rack up big holiday sales and to stick it to Ron Burkle's proxy fight bid once and for all.

As our sister blog Endgadet reported from B&N's press conference at their flagship store in Manhattan's Union Square, B&N has pitched the Nook Color as "the first reader's tablet." The 7" Wi-Fi enabled device -- 8" high, 5" wide, and weighing 15.6 ounces -- has an LG touchscreen which uses full lamination to, in the words of CEO William Lynch, "maximize the readability benefits of a backlit screen while minimizing the glare." It's powered by Google's Android mobile operating system, though in a custom-built variant for the Nook.

With 8GB in memory, the Nook can store 6,000 books. Content can be shared via Twitter and Facebook, and more than 100 magazines and newspapers -- all in color -- will be available through the Nook Newsstand service. (Every Nook Color will come with a free 14-day trial subscription.) Other features, previously announced or just introduced, include enhanced e-books geared towards children, personalized shopping, downloadable games, and the ability for developers to produce "reading-centric applications."

Quirks and Curiosities

There are some drawbacks, expected and curious. Battery life for Nook Color is 8 hours, which is not only a couple of hours less than the iPad but also less-than-desirable for a product marketed as an e-reading device (since the need for such frequent recharges may detract from the continuous reading experience). Adoble's Flash isn't supported on the Nook Color, though Lynch told the assembled audience that those who want to view Flash-enabled websites and videos can "go to the web." And based on an early hands-on demonstration by Endgadget's Ross Miller, page-turning is "somewhat sluggish" and the software may not be complete.

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As with the earlier Wi-Fi and 3G Nook models, the Nook Color doesn't support every type of e-book file -- there's DRM to contend with, Kindle books are strictly verboten, and "Nookbooks" (in the new parlance) can only be read on devices that enable B&N's software.

The most curious part of the Nook Color's debut, however, is where it will be sold. Not only will it be available at B&N stores, but also at Best Buy (BBY), Wal-Mart (WMT) and, much to my surprise, Books-A-Million (BAMM), the 3rd largest bookstore in the country, with 233 stores. (Post updated below). But the partnership effectively ties together two of the three largest book retailers, shutting out Borders (BGP), the ailing #2 that has pinned its strategy on e-book devices with less name recognition -- and lower sales.

The new Nook Color launch was more than just a product introduction; it was also was a splashy way for Barnes & Noble to trumpet how its first two Nook devices have fared in the market. Lynch claimed "Nook has sold well over a million units, and we're well on our way to selling a million more." That announcement sends a couple of messages: first, that B&N is willing to provide generalized sales numbers when Amazon refuses to do so; second, that the company can compete in the e-book category in a meaningful way; and third, to show investors that despite turmoil at the top, there's good reason to stick with B&N as it executes a strategy conceived of under the watch of chairman Leonard Riggio.

But B&N's product strategy with the Nook also carries some big risks: By trying to find a middle ground between tablet computers and e-readers, the Nook may be neither fish nor fowl; a device that does some of everything but nothing really well. It lacks the iPad's robust ecosystem of app software, and the Kindle's easy-on-the-eyes emphasis on e-reading.

Indeed, it will be interesting to see how Wall Street reacts to the news of Nook Color in the days ahead. B&N's stock price closed down 1.25% to 14.98 at the end of the day. Yet even if investors don't see the new device as good news, B&N seeks to establish that the middle ground of the marketplace where the company is most comfortable -- and, potentially, where it can thrive the most.

Update: Though neither B&N nor Books-A-Million responded directly to my query, they did issue a statement on Nook Color being stocked exclusively at the latter retail chain. "We wanted to capitalize on the amazing growth in digital content, and the NOOK line became the clear choice to bring our customers a superior offering of easy-to-use, beautifully designed eReading products," said President Craig Hansen. "We're thrilled to partner with Barnes & Noble to deliver Books-A-Million's book lovers a way to read all the books, magazines and newspapers they love at home and on the go."
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