While Barnes & Noble Chief Executive Officer William Lynch describes Apple's iPad as a great product, even a juggernaut, he also has a few criticisms. Mainly that it's expensive and weighs too much.
Once Lynch could be certain that Barnes & Noble could build a tablet with similar dimensions to the best-selling iPad that was also cheaper and lighter, he went ahead with the project after killing it twice. The result is the 9-inch Nook HD+ that went on sale Wednesday for $269. The least expensive iPad sells for $499 and weighs 27 percent more.
"We think there is a big market there" below the pricing of the iPad, Lynch said. "We're starting this product at $269 for a large-format tablet, which is a wow, disruptive price point."
The largest U.S. bookstore chain's new devices, which also include a 7-inch Nook HD starting at $199, will also take on Amazon.com's updated Kindle Fire announced Sept. 6. The online retailer, which also pitched its new devices as a cheaper competitor to the iPad, starts its 7-inch tablet at $199 and an 8.9-inch at $299.
Barnes & Noble shares rose 6 percent to $12.99 Wednesday. The shares had dropped 15 percent this year through Tuesday.
More content
Both Amazon and Barnes & Noble have added access to content beyond digital books, and touted specifications such as screen resolution and processing speed as selling points to expand their customer base beyond readers.
Nook Video, announced Tuesday, will allow users to buy movies and television shows from providers such as HBO and Walt Disney Studios. The video, like other Nook content, can then be stored via cloud computing and accessed on multiple devices.
"Side by side with the new Kindle Fires, they are competitive," said Sarah Rotman Epps, an analyst for Forrester Research Inc. in Cambridge, Mass. Getting people to choose the Nook over an iPad will be much more difficult, because Apple customers care less about price, she said.
Barnes & Noble has anchored its future to digital books by investing in the Nook at the expense of profit as more readers embrace the technology. Revenue from the Nook unit, which includes devices and e-books, rose 34 percent to $933 million in the fiscal year through April 28, while sales at its retail and college units declined 1.6 percent to $6.6 billion.
The new devices are part of Barnes & Noble's plan to maintain and expand its 25 percent share of the U.S. e-book market - a portion it never attained in the market for printed books. Digital content sales, which are more profitable than printed books, more than doubled last year to $483 million.
Crowded market
This marks the fourth straight year that Barnes & Noble has announced a new device for the holiday shopping season after unveiling the first Nook in October 2009. This time, it will face more competition, with tablets being released by Google, Microsoft and possibly a smaller version of the iPad.
That hasn't stopped Barnes & Noble from producing the most Nooks ever for the holidays, Lynch said. The devices will be sold in Target and Walmart stores while top competitor Amazon won't be, he said. Walmart said it would stop selling Kindles last week after Target took similar action in May.
"For new customer acquisition, that's a strength," Epps said.
The majority of Barnes & Noble's shoppers are women, and the retailer kept them in mind when designing the new devices. The 7-inch Nook is skinnier and lighter than a comparable Amazon device, making it easier for people with smaller hands to hold, the company said. Less weight also makes it easier for any user to read a book or watch a movie for several hours, Lynch said.
The new devices also have a revamped store that offers a recommendation service, Nook Channels, that combines the knowledge of human booksellers with algorithms to serve up options.
The products will ship in late October and be available in Barnes & Noble stores and other chains, including Best Buy Co., in early November.
Matt Townsend is a Bloomberg writer. E-mail: mtownsend9@bloomberg.net
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