By DAN GALLAGHER and ANDRIA CHENG
Barnes & Noble Inc. lifted the wraps off a new version of its Nook e-reader device on Tuesday, designed to go directly against the popular Amazon Kindle in terms of price and features.
In a press event inside one of its New York stores Tuesday morning, Barnes announced the new 6-inch Nook Simple Touch Reader, an E-Ink-based touch-screen device that will go on sale next month for $139. The company already sells the Nook Color, an LCD e-reader device that sells for $250. It will eventually retire its original Nook device, executives said at the event.
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Chief Executive William Lynch said he doesn't see any cannibalization of sales between the Nook and Nook Color, saying one targets specifically the pure e-reader market while the other offers tablet functions. The company said the idea for the Nook was spurred by a reader requesting a simple reading device for her grandmother.
"These two markets both have exclusive growth," Lynch told MarketWatch, declining to break down the sales mix he expects to generate from the two devices. "We expect a lot of growth from both. There are people who are interested in reading, but are turned off by keys and buttons."
The newest device carries a price on par with the basic version of the Kindle, though Amazon.com (AMZN)
In an open showdown with the Kindle, Lynch made a side-by-side comparison of the two devices. He touted the new Nook's longer battery life claiming it to be roughly double the Kindle's as well as one single button on the Nook versus 38 buttons on the Kindle.
Competition between the two companies is heating up quickly as the book market goes electronic. Amazon is believed to have roughly two-thirds of the market for E-Ink-based reader devices, with the remainder divided among Barnes, Sony (SNE)
Lynch said Barnes & Noble now has more than 25% of the digital book market.
The U.S. digital book market is estimated to surge to $5 billion to $6 billion in sales from $2 billion in the next couple of years, said Janney Capital Markets analyst David Strasser, who recently initiated his coverage of Barnes & Noble with a buy rating. He estimated there are more than 6 million users of the Kindle e-reader from Amazon and about 2 million to 2.5 million Nook users. Behind the buy rating on Barnes & Noble.
Lynch declined to disclose how many Nooks have been sold, except to say they are in the millions. He repeated the company's retail footprint of more than 700 physical book stores with 40,000 Nook sellers on the ground give it a "competitive advantage."
"Retail remains deep in our DNA," he said, adding the stores help the company offer differentiated customer service. "It's a big part of why (customers) choose (the Nook devices.)"
The newest Nook offers longer battery life the company claims up to two months of reading on a single charge with the WiFi turned off. The touch-screen also sets it apart from the Kindle, which still uses navigation keys to operate the device.
Barnes & Noble said the newest Nook will be available to ship around June 10.
The company's digital book business has helped it attract buyout attention. Last week, the company received a takeover bid from Liberty Media, owned by billionaire investor John Malone, which offered to buy the company for $17 per share. Malone later told investors that the company's Nook business was a key point of attraction for the bid.
Barnes & Noble is still evaluating the Liberty offer which represented a premium of more than 20% to the company's share price before the bid, though the stock was trading above the $17 mark as recently as mid-February.
Liberty's offer also won't likely proceed as it is without being challenged. Billionaire investor Ron Burkle's Yucaipa Cos., which lost a proxy fight last year against the bookseller, said Monday he's bought additional 603,000 shares at about $18.49 apiece to bring his stake of the bookseller to just under 20%. Analysts have said Liberty's offer was too low. Read related story on Barnes & Noble may get freer hand under Liberty.