Digital Media

Bookseller Barnes & Noble reportedly plans to release its own e-book reader to challenge Amazon.com's Kindle.

The wireless device, which is expected to have a 6-inch touch screen and virtual keyboard, could be offered for sale as early as next month, according to a Wall Street Journal report on Thursday that cited people briefed on the matter. A price range was not revealed.

The device is also expected to run Google's Android operating system, according to a Gizmodo report that cited a source who claimed to be a mobile-application developer for Barnes & Noble.

A representative for Barnes & Noble, the nation's largest brick-and-mortar bookseller, declined to comment on whether such a device was in the works.

"We have made no announcement of an e-book reader device," said Mary Ellen Keating, senior vice president of corporate communications and public affairs, pointing out that the company was already supporting a variety of e-book reader devices. However, she declined to comment specifically on whether Barnes & Noble was developing its own device.

Barnes & Noble announced in July that it was returning to the e-book market with the launch of its own digital-book store, which allows customers to read digital books on an array of different platforms, including the iPhone, the iPod Touch, and BlackBerry smartphones. Barnes & Noble is also expected to be the exclusive digital-book supplier for the upcoming Plastic Logic eReader, which is not scheduled to go on sale until next year.

However, if the reports prove accurate, the device should compete directly with Amazon's new Kindle 2, which the online retail giant unveiled earlier this week. The new version also sports a 6-inch screen and wireless downloads, and is expected to be available on October 19.

Amazon also announced that it is cutting the price of the device by $40, to $259, and bringing it more in line with Sony's Reader Pocket Edition, which sells for $199. The retailer also announced an international version that would allow customers to download books in more than 100 countries outside the United States.

Although a bit late to the market, a Barnes & Noble device would join an expected boom in the e-book reader sales. In a report released Wednesday, Forrester Research raised its 2009 forecast for e-reader sales in the United States to 3 million units from its previous prediction of 2 million sales. Forrester also expects Amazon's Kindle to command about 60 percent of the e-reader market in 2009, compared with 35 percent for Sony's Reader.

The revelation that the device may be powered by Android comes as the 2-year-old operating system rides a wave of support from wireless handset makers. In the past couple of months, nine devices using Android have been announced, including the Motorola Cliq, which goes on sale in November, and the new Samsung Moment, which was announced Wednesday at the CTIA Fall 2009 trade show.

Amazon's Kindle.

(Credit: Amazon)

Amazon announced late Tuesday that it was introducing a new version of its Kindle e-book reader that can wirelessly download books in the United States and more than 100 countries.

The new device, which is expected to ship on October 19, is physically similar to the previous Kindle with a six-inch display. However, the new e-reader will be capable of downloading books and periodicals via wireless networks belonging to AT&T and its international partners.

"We have millions of customers in countries all over the world who read English-language books," Amazon.com Founder and CEO Jeff Bezos said in a statement. "Kindle enables these customers to think of a book and download it wirelessly in less than 60 seconds."

The online retailer also announced that it would cut the price of its U.S. Kindle by $40 to $259, bringing it more in line with Sony's Reader Pocket Edition, which sells for $199. The price cut is the second for Amazon's e-reader in four months: in July, the price of the Kindle 2 dropped from $359 to $299. Amazon also sells a larger version called the Kindle DX for $489.

The Seattle-based e-tailer said international customers will have access to about 220,000 book titles at its Kindle Store compared with the 350,000 titles available to U.S. customers. Publishers involved with the store include Simon & Schuster, HarperCollins, Lonely Planet, Harlequin, Penguin, Bloomsbury, and Hachette.

With the announcements, Amazon is attempting to position itself for a boom in e-reader sales that Forrester Research expects in the U.S. over the next few years. In a report to be released Wednesday, Forrester Research raised its 2009 forecast for e-reader sales in the United States to 3 million units from its previous prediction of 2 million sales. Forrester Research also expects Amazon's Kindle to command about 60 percent of the e-reader market in 2009, compared with 35 percent for Sony's Reader.

"This holiday season, eReaders will be one category that's a breakout success," Forrester analyst Sarah Rotman Epps said in the report. "Lower prices, more content, better distribution, and lots of media hype are contributing to faster-than-expected adoption of eReader devices in 2009."

Updated 5:25 a.m. PST Wednesday to note the official release of the Kindle application.

Amazon on Wednesday unveiled a free application that will allow the same electronic books available on the e-tailer's Kindle to be read on Apple's iPhone and iPod Touch.

The program will be available for download for Apple's App Store and give users access to the more than 240,000 e-books that Kindle users can buy on Amazon. The program's Whisper Sync service promises to keep track of a reader's place in their chosen book, allowing users to pick up where they left off on either device the Kindle or iPhone if users own both.

While other e-book reader such as Stanza from Lexcycle and the eReader from Fictionwise are already popular on iPhones, it is the first time that Kindle content has been made available on a non-Kindle device. Amazon Vice President Ian Freed hinted at the move in an interview with CNET News last month, and expressed optimism that some of those who try Kindle on a cell phone will ultimately buy Amazon's device.

The app release is Amazon's latest salvo for a greater piece of the e-book market. The e-tailer unveiled the second generation of its Kindle e-book reader on February 9. Amazon touted the $359 Kindle 2 as thinner than its predecessor and offering longer battery life.

But the company quickly came under criticism from the Authors Guild, which claimed the device's new text-to-speech feature would hurt sales of audio books. The trade group representing 9,000 authors argued that Amazon wasn't compensating authors for the feature, and thus violating authors' copyrights. Amazon ultimately acquiesced, announcing late last month that it would modify systems to allow authors and publishers to decide whether to enable Kindle's text-to-speech function on a per-title basis.

In launching the new app, Amazon is taking on Google, which last month launched a mobile version of its Google Book Search, giving iPhone and Android users instant access to more than 1.5 million public domain books.

See also: First impressions of the Kindle iPhone app

The Kindle 2 could generate revenue of $305 million and gross profit of up to $70 million for Amazon this year, according to estimates made by investment bank Collins Stewart.

The estimates are just the latest heady Wall Street predictions for the Kindle 2, Amazon's digital book reader. Last month, a Citigroup analyst published a report that predicted the Kindle 2 would generate $1.2 billion in revenue by 2010.

Amazon hasn't broken out financial numbers for the Kindle 2, which made its debut last month.

Collins Stewart estimates that the device will see sales of $1.6 billion and $400 million in gross profit by the 2012.

"Kindle not only removes multiple costs and inefficiencies from the current value-chain for books (print & fulfillment cost, backorder risk, and inventory management)," the bank wrote, "but also increases propensity to buy more books/content and other adjacent products."

Collins Stewart also compared the Kindle 2 to the Sony eBook Reader in 13 different parameters and concluded: "Except for (the) touch-screen and built-in reading light offered by Sony, the Kindle is a much better device. More importantly, due to Amazon's focus/expertise in books/content, Kindle provides not only the largest repository of eBooks/content but also dozens of user-friendly features/functionality."

In the story of e-book readers, we're still in the first chapter.

On Monday morning Amazon unveiled its widely anticipated Kindle 2 device at a high-profile event in New York City. The updated, thinner e-book reader included some obvious cosmetic changes from its original Kindle as well as other more evolutionary tweaks. On the same day in the same city, another e-book reader maker, Plastic Logic, looked to stake out territory as the mobile device to read newspapers. Plastic Logic doesn't have a device on the market yet--not until next year--but already it's cementing relationships with newspapers and short-form content aggregators.

Amazon's new Kindle still pricey at $359.

(Credit: David Carnoy/CBS Interactive)

At long last there is finally widespread attention cast on a market that's been slowly gaining some momentum. But though the market is expanding, it's still not reached a mainstream audience, and it's going to be longer still until it gets there.

Sales continue to grow (some analysts have pegged Kindle sales at 500,000 units), but e-book readers are still not anywhere near iPod-level penetration of the consumer market. Price is a big part of it.

"The devices are still relatively expensive and appeal to a small group of affluent, avid readers, and the content available to this point has mostly been in line with that target customer," said Ross Rubin, director of industry analysis for the NPD Group.

At $359 for the Kindle, that's a luxury device anyway you look at it. Like most consumer electronic devices, getting below $200 is key to capturing a more mainstream audience. Sony is almost there at $269, but it doesn't have any way of downloading book content wirelessly the way the Kindle does.

But there's a free option now too. Last week Google launched a mobile version of its Google Book Search, giving iPhone and Android users access to more than 1.5 million public domain books. The works of authors such as William Shakespeare, Jane Austen, and Charles Dickens were optimized to be read on the small screen.

And while that was immediately read as a threat to Amazon's e-book store content, it's actually an entirely different proposition. Reading long-form content on a small screen will not appeal to a lot of people, even if it is free, and from the canon of Western literature.

The screens on mobile phones are not optimized for reading text the way e-ink devices like the Kindle, Sony Reader, and Plastic Logic's will be. IDC analyst Richard Shim says books available for free on those devices will appeal for reference, not for settling in for a long read with a cup of coffee, or on an airplane.

"What it does do is it expands the audience," said Shim. "But how much of an audience you can capture is unclear on a less-than-ideal reading device."

Amazon is also looking to make e-books more ubiquitous on other devices besides the Kindle. The company has said it will eventually make its e-books available on cell phones. But again, that's a different model than reading novels or newspapers on e-ink devices. So despite not requiring consumers to pay for a separate device like a Kindle, it's not likely to hurt e-book reader sales for those who plan to read long-form content.

Plastic Logic's plan is still unclear at this point in regard to price. The Silicon Valley company working up a reader device optimized for newspapers: a larger screen, with color displays, and wireless access to newspaper content that's constantly updated. But the looming question is the price. We do know it is aimed more at mobile professionals (it's optimized for document reading too), which signals that this could be on the pricier side. Plastic Logic will only say it plans to be competitive.

But the fact that Plastic Logic is honing in on the newspaper business could provide for some interesting possibilities in regard to business models.

"With newspapers, that's a business model that's broken. They're trying to maintain the audience for that content," said Shim of IDC. "With this technology, (e-readers are) looked at as a potential lifesaver for that industry."

Plastic Logic's e-ink newspaper reader could use publisher subsidies to bring down the price.

(Credit: Plastic Logic Limited)

In which case, publishers may want to subsidize the devices for people to keep reading the content, an idea The New York Times recently floated. That would be a great deal for consumers and certainly expand the audience if the price was reasonable.

But while customers certainly like the idea of free or almost free, the value for the content providers is still up in the air, as Shim points out.

"How do you make your money back? They have to get advertisers to buy into the concept," he said. "Plastic Logic has to understand the newspaper business and that there are a lot of question marks around it."

Plastic Logic won't come to market for at least another year, so there's still time to figure out the model. In the meantime, the golden ticket for e-books to officially enter the mainstream is the textbook market, which also appears a long way off.

Getting textbook publishers to embrace them would have the potential, said Rubin, to turn e-book readers from "something that appeals to affluent avid readers to something that could conceivably be used in every household that has a student."

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