Why the new Nook will flop

Barnes & Noble just introduced the Nookcolor, a full-color version of its e-reader. In competition with tablets like Apple's iPad, it doesn't stand a chance.

By TheStreet Staff Oct 28, 2010 10:14AM

By Seth Fiegerman, MainStreet


Barnes & Noble (BKS) is pulling out all the stops to conquer the e-reader market, but its most recent attempt may have missed the mark.


The company on Tuesday debuted the Nookcolor, an updated version of the current black-and-white Nook e-reader. The new device, which will start shipping in mid-November, boasts more memory for storing books; an expanded selection of magazines, newspapers and graphic novels; and, most notably, a full-color touch screen.


In a press release announcing the new product, Barnes & Noble made its intention clear. It referred to the Nookcolor as the "first-ever reader's tablet." In other words, the device is attempting to compete not only with e-readers like Amazon's (AMZN) Kindle but also tablets like Apple's (AAPL) iPad.

This is a bold move, to say the least, but it may be ill-advised.

At the moment, the biggest perk that the Nookcolor has going for it, compared with the rest of the tablet market, is its price. Barnes & Noble will sell the Nookcolor for $249, which is half the cost of the cheapest iPad and $150 cheaper than the soon-to-be-released Samsung Tablet.


However, the pricing and branding of the device place it in a kind of no-man's land for gadgets.


Sure, this is an e-reader first and foremost, but at $249, it’s more than twice the price of Borders' (BGP) Kobo e-reader.  And, yes, the Nookcolor may have a new and improved selection of periodicals and graphic novels displayed in full color.

But the trade-off is that it is choosing to forfeit the e-ink technology that displays black-and-white text and images that mimic the feel of reading from a piece of paper.

Instead the Nookcolor will use a backlit LCD screen, meaning that it will feel like you’re reading books on a computer screen. The company is trying to offset this by adding a layer of film to reduce glare, but this will likely still be worse on the eyes than the original Nook. On top of that, the backlight will drastically decrease the battery life.


For the time being, there really is no competition between the Nookcolor and the rest of the tablet market. Yes, it may very well end up having a better reading experience than a device like the iPad (although that remains to be seen), but what about the many other features that make a good tablet?


The iPad has access to more than 100,000 apps, including publications like Wired and programs that allow you to make videos, play games and listen to music. The Nookcolor, on the other hand, is only in the beginning stages of building up its app store and therefore boasts only about a handful of apps like Sudoku and Pandora which come standard on most devices.


Aside from that, the Nookcolor has less battery life than the iPad (8 hours and 10 hours, respectively), half the memory of the cheapest iPad (8 GB vs. 16 GB) and, unlike with most tablets, there are no 3G-enabled Nookcolors, meaning your Internet access is limited to Wi-Fi only. Plus, there are more than a dozen new tablets rumored to be in the works now, which will add further competition to the Nookcolor going forward.


That said, it’s clear Barnes and Noble needs to do something to attract more attention to its e-readers. When the company announced the first Nook early last year, it was quickly overshadowed by Apple’s announcement of the iPad, and at the moment, the Kindle still dominates the e-reader market with two-thirds of all sales for e-readers and e-books.


This week, perhaps more than any other, offered a glimpse into the three diverging strategies of the dominant e-reader developers. While Barnes & Noble tried to innovate the e-reader market, Borders decided to further drop the price on its e-readers to undercut the market. Amazon, meanwhile, has chosen to conquer the market by appropriating the best features of its competitors. Case in point, the Kindle has just begun allowing users to lend out their e-books for 14 days, a feature that had until now been a major selling point for the Nook.


It remains to be seen which company will have the last word, backlit or not, in the e-reader battle.


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