Barnes & Noble elbows its way into e-reader business

America's largest book store chain, Barnes & Noble (BKS), is not satisfied to stand by and watch Amazon (AMZN) and Sony (SNE) take control of the e-reader business. According to sources interviewed by The Wall Street Journal, Barnes & Noble will release its own e-reader in time for the holidays. It will have a six inch screen provided by E-Ink Corp., and other features similar to those of the competition, including wireless capacity to download e-books.

It is almost stating the obvious to say that the e-book field is getting crowed, and that there are not likely to be three or four big winners in the business. Industry experts say that market leader Amazon will have 1.5 million active Kindles in the market place by year's end, which is not a huge number. The e-reader also competes with computer downloads of books. Microsoft's (MSFT) CEO Steve Ballmer recently said he was not interested in the e-reader field. The PC, he reasoned, is the best de facto e-reader in the world.

The other hurdle for the Barnes & Noble product is that recent Forrester research indicates that people are not likely to pay more than $100 for the device, which will probably limit sales. Amazon recently dropped the Kindle price to $249. But that still may not be cheap enough to spark higher sales.

The holidays will be the litmus test for these products, as they are for many other consumer electronics devices. If e-reader sales do poorly in the last two months of the year, it may be that the product, no matter who the maker may be, is just a bust.

Douglas A. McIntyre is an editor at 24/7 Wall St.


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