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| Nook Color |
The bookseller hopes the Nook Color software upgrade will make the device an attractive alternative for consumers who want features like e-mail and other applications, like learning and organizational tools, plus popular games like Rovio's "Angry Birds" and an enhanced multimedia experience with Adobe Systems Inc.'s (ADBE) Flash video player. Priced at $249 apiece, Nook Color is hundreds of dollars less than competitors that include Apple Inc.'s (AAPL) wildly popular iPad 2, Motorola Mobility Inc.'s (MMI) Xoom and the Research In Motion Ltd. (RIMM) PlayBook.
Of course, the more expensive alternatives have several advantages over the Nook Color, like cameras, a much wider selection of apps than Nook will at first offer and more powerful processors. However, for those looking for basic tablet computing to go along with a full-color, e-book reader, Nook Color is a cheaper and perhaps more attractive alternative.
Savvy Nook Color users have for months been taking matters into their own hands, using what's called "rooting" or "jail-breaking" software to make their e-readers more tablet-like, rather than wait for Barnes & Noble to make the upgrade. Barnes & Noble had said it would add the new features to the Nook Color this year, but some were willing to risk voiding their warranties by downloading the fix, which is legal but unauthorized by Barnes & Noble.
The upgrade will bring to Nook Color Google Inc.'s (GOOG) Android 2.2/Froyo operating system, and users will now be able to purchase and download more apps from the Barnes & Noble website than before, though initially the selection is quite limited compared with the wider Android store available with a rooted Nook. The apps range in price from free to $99 apiece, with about half for $2.99 or less and the "vast majority" at $5.99 or less, according to the company.
On a conference call to discuss the upgrade, the company said it is using a standard split when selling apps, whereby 70% goes to the app developer and 30% goes to Barnes & Noble.
Barnes & Noble has focused most of its cash flow on developing the Nook in recent quarters, as its brick-and-mortar bookstores have been challenged by online competitors like Amazon.com Inc. (AMZN). Its smaller rival, Borders Group Inc. (BGPIQ), was late to the e-reader game and filed for bankruptcy protection earlier this year, and its future remains uncertain as it closes hundreds of stores in an effort to create a viable business.
The Nook now has about 25% of the e-book market, the company says, trailing Amazon's dominant Kindle e-reader, which analysts say commands most of the rest of the market. Borders cast its lot with Toronto-based Kobo, whose reader has struggled to gain a foothold and recently closed a $50 million round of funding to fuel overseas growth, primarily in Europe. Barnes & Noble calls the Nook line of e-readers the best-selling product in the nearly four decades since Chairman Leonard Riggio took over the chain and began its rapid expansion.
In February, Barnes & Noble suspended its quarterly dividend in order to funnel more cash into its digital strategy. Shares were recently off 5.5% at $9.68 after earlier this month hitting a 15-year low of $8.45 apiece.
