E-Day: Barnes & Noble Takes Aim at Amazon

Barnes & Noble is opening an e-bookstore to compete with Amazon.
Publish date:

(Update: Commentary from two analysts added.)

The e-book war is on.

Barnes & Noble

(BKS) - Get Report

announced today that it has launched a

new e-bookstore

that will allow shoppers to read books on


iPhone, iPod Touch, BlackBerry and computers.

The bricks-and-mortars bookseller will also be the exclusive provider of books for a reader from Plastic Logic, which will be released in 2010. It expects to make more devices compatible over the next several months.

Barnes & Noble plans to offer more than 700,000 titles initially and up to 1 million within a year. That includes the more than half-million books


(GOOG) - Get Report

recently made available for free. It will sell all other trade and traditional titles for $9.99 each.


(AMZN) - Get Report

offers about 325,000 titles for its Kindle, while the


(SNE) - Get Report

Reader has about 600,000, including Google's free titles.

Forrester Research estimates that electronic books make up less than 2% of total U.S. book sales. But, of course, like music downloading, the market for online books is expected to grow.

Barnes & Noble did sell e-books in 2001, but exited the market after it found inadequate demand. But analysts say the Kindle's popularity has stimulated consumer appetite for electronic books.

Barnes & Noble has been looking for ways to make its digital presence known. Last month the company

launched an application for the iPhone and iPod touch, allowing readers access to exclusive content and customer reviews, as well as information about the more than 50,000 events in stores.

In March, the company acquired electronic book company Fictionwise and has worked quickly to develop its product line.

The book retailer has been struggling,

widening its loss

to $2.7 million, or 5 cents a share in the second-quarter, as consumers cut back cut back on book and music purchases and turned to digital outlets.

Overall, analysts are not over-excited about the e-bookstore launch. Stifel Nicolaus & Co. analyst David Schick said Barnes & Noble remains the leader in a difficult market and the e-book business is promising, but the move "will not stem the tide of general pressure" on the retailer.

And Standard & Poor's equity analyst Michael Souers said he does not expect the electronic book business to have a major impact on earnings in the medium term. Souers said he sees Barnes & Noble shares as overpriced and maintains a "strong sell" rating on the retailer.

Shares of Barnes & Noble were down 2.7% to $21.51 in early afternoon trading.

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