By Battle Road Research, an equity research firm.

Weighing in at 11 ounces, and with a price tag of $259,

Barnes & Noble's

(BKS) - Get Report

Nook represents the latest entrant in the growing e-book reader category.

Although portable e-book readers have been available for several years,

Amazon.com

(AMZN) - Get Report

jump-started the category with the Kindle, a dedicated reading device that unlike its predecessors included two breakthrough technologies. Those are:

  • a unique, gray-scale imaging display manufactured by E-Ink of Cambridge, Mass., that allows readers to comfortably read and scroll through text, without the annoyance of a back-lit display
  • .
  • A wireless transfer capability that allows hundreds of thousands of books to be downloaded in under a minute, regardless of page length

.

Barnes & Noble will enter the e-book reader fray next month with the Nook, a new e-book reader that embeds many technologies used by the Kindle, and raises the ante in some areas. The Nook features the same digital display as the Kindle, as well as a wireless connection that enables fast downloads of e-books.

A novel yet controversial feature will be the Nook's ability to share books between various electronic devices, for a period of up to 14 days, though the details on how this will work are sketchy. The Nook will be powered by

Google's

(GOOG) - Get Report

Android operating system, which has lately been appearing in a number of smartphones.

In a sense, Barnes & Noble may suffer from being the third entrant into the category, in the sense that Amazon may have shipped close to 1 million Kindles already, and

Sony

(SNE) - Get Report

, for its part, has said it has shipped close to half a million of its e-book readers.

Amazon's Kindle 2, the second incarnation of Amazon's e-book reader, is lighter, faster, sleeker and less expensive than its predecessor, and began shipping in February 2009, with a price tag of $359.

Amazon recently reduced the price to $259, its second price cut in four months. Most Kindle books are priced at $9.99, regardless of page length, and are priced at a steep discount to their hardcover brethren. Through the Kindle, Amazon hopes to control, or at least influence, sales of digital books, newspapers, magazines and play an even bigger role than it does in the delivery of hardcover and paperback books.

At first glance, Barnes & Noble's strategy appears to be a well-thought out way in which to build store traffic over the holidays. No doubt having the device in the store will give consumers an incentive to play with it.

Additionally, the Nook will display various in-store promotions when it's used inside any of Barnes & Noble's bookstores. With Google powering the operating system, don't be surprised if advertisements begin to appear on B&N's e-book reader.

Not surprisingly, the Nook will not support books formatted for the Amazon Kindle.

Shortly before 11 a.m. Tuesday, shares of Barnes & Noble were down 18 cents to $17.31. Amazon shares also were trading lower, down $1.47, to $123.17.

Battle Road Research (www.battleroad.com) an equity research firm, serves fund managers, analysts and financial advisers with an independent voice on technology, health care, solar power and education stocks. Battle Road analysts place an equal weight on industry and securities analysis in an effort to seek out stocks to buy and stocks to avoid. As an integral part of our research process, we tap into a network of industry sources who provide insight into the companies we cover. We present our conclusions in a straightforward buy, hold, sell format. As a matter of principle, we refrain from investment banking, company-paid reports, and personal investment in the stocks we research. Visit us on the Web at www.battleroad.com and www.battleroadblog.com.