Analysts: Barnes & Noble’s New, Simple Nook Raises The Bar

on May 24 2011 5:27 PM

Barnes & Noble unveiled its latest entry into the increasingly competitive e-reader market this week, the Nook Touch Reader.

The e-reader has touch capabilities and is being billed as a simple touch reader. In addition to a 6-inch touchscreen, it has a battery life of up to two months on a single charge with Wi-Fi off, weighs 7.48 ounces, a faster processor and comes with one button.

During the event introducing the product in New York City, Barnes & Noble chief executive William Lynch took at shot at the company's rival, Amazon, and said the Kindle comes with 38 buttons. He said the Nook touch reader is the simplest e-reader ever created.

The e-reader, which will be available for $139 with preorders starting on June 10, uses Neonode infrared technology for its touch-screen. The same technology was used by Sony for its Reader and Kobo for its device. The touch Nook also comes with two gigabytes of storage plus MicroSD expansion, and it has a built-in Wi-Fi capability. It does not, however, come with 3G capability.

Touch makes it simple to use, and the beautifully compact design makes it the most portable eReader in its class. Add to that an unmatched battery life, the most advanced paper-like touch display on the market and wireless access to the world's largest digital bookstore, and we believe that for readers of all ages, the All-New NOOK is the best eReader on the market, and a great value at $139, Lynch said.

The simplistic touch reader had many analysts impressed. James McQuivey, analyst at Gartner, said the Nook's strategy to go simple could pay big dividends for Barnes & Noble.

The new Nook is going to be a hit, McQuivey said. It is so much simpler to use than even the Kindle that the less tech-driven people who will buy their first eReader this year will find it very appealing. And the price is right for that audience, too. Barnes & Noble is surely hoping that its stores will help sell these lightweight devices by letting people heft them and experience the joys of touch-oriented reading.

In terms of hardware, McQuivey says Barnes & Noble has raised the bar and it is up to Amazon to match that offering. I think Amazon can do it, but we'll see what effect the early lead of B&N has on Amazon's catch-up effort, McQuivey said.

Dmitriy Molchanov, an analyst with the Yankee Group, said the device shows how much Barnes & Noble has matured in two years. He said the first generation Nook was overly complex and tried to cram two ideas into one device to appeal to separate demos. With this version, he said it's clear Barnes & Noble is going after the older demo, who are looking to buy their first e-readers and don't want anything overly complex.

Elegant and simple, that's where they have gone, Molchanov said. If you look at the specs, they have beaten Amazon.

Both McQuivey and Molchanov agree while Barnes & Noble has done well for itself on the hardware side, Amazon still has more content. Amazon has three times as many paid titles as Barnes & Noble and it has better distribution. Amazon also benefits from integrated billing and a synced media platform.

During the introduction of the new Nook, Lynch said the device had already captured 25 percent of the e-reader market, in its short 18 months of existence. To go beyond that, analysts say Barnes & Noble will have to match Amazon's efforts in content.

I think Amazon is doing more to shape the overall publishing industry with those moves than B&N has done with its devices. B&N will have to consider long and hard whether it needs to get more directly involved in content as Amazon has done or whether it can partner with existing publishers to change the way books are brought to market, McQuivey said.

Barnes & Noble's stock price went up 73 cents on the day, going from $18.59 per share to $19.92.

Follow Gabriel Perna on Twitter at @GabrielSPerna

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