Why Is Barnes & Noble Even Trying?

In a mad scramble to rewrite its autobiography as something that isn't filed away in the Greek tragedies section, Barnes & Noble (NYSE: BKS  ) is hosting a media event next Tuesday.

It's been a year since the leading -- and bleeding -- bookseller introduced the Nook, so an update is in order.

The original model had potential. Matching Amazon.com's (Nasdaq: AMZN  ) Kindle $259 price point, yet raising the stakes with a second small color screen, was a spunky move.

However, when it became clear that it wasn't going to make a dent in Kindle's market -- and with the successful debut of Apple's (Nasdaq: AAPL  ) iPad -- B&N resorted to a price war.

It shocked the market by aggressively pricing its Nook at $199, with introducing a Wi-Fi-only model at a mere $149.

Maybe B&N figured that the competition would let the Nook corner the entry-level market, but that wasn't the case. Amazon, Sony (NYSE: SNE  ) , and even Borders (NYSE: BGP  ) responded quickly with markdowns of their own.

B&N backed itself into a corner, and that's a dangerous place to be for a resources-strapped company fighting a hairy proxy battle for its independent survival.

What can it possibly announce come Tuesday? It's hard for B&N to take prices lower, and it's not as if it's a feature or two away from relevancy. Kindle is going to walk away with the dedicated reader space, while Apple and the flurry of tablets will take over the high-end and graphical textbook market.

B&N's best move may be to kill the Nook altogether at this point and see if it can turn a profit on digital delivery for rival readers and tablets. It's not going to do that, though. You don't schedule a media event to announce your retirement. B&N is going to come out with something flashy, powerful, and with a few interesting functions that no other dedicated e-reader can offer, but it's still not going to be a major player in this space.

Its potential buyers are well-read. They can see that this won't end pretty for B&N next week.

What would it to take for you to buy a Nook? Share your thoughts in the comment box below.

Apple and Amazon.com are Motley Fool Stock Advisor recommendations. The Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Longtime Fool contributor Rick Munarriz owns a Kindle and iPad, but he uses his iPad a lot more. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 20, 2010, at 12:31 PM, dan6464 wrote:

    I love it when people compare the ipad to an ereader. It just shows you don't read. The benefit of the nook is android and epub. I get most of my books from overdrive, but i go into barnes and noble much more since i bought my nook. With the kindle and ipad one can't take books out of the library using overdrive. Also barnes and noble has been great with firmware updates. If barnes and noble hadn't come out with the nook they still would have problems and people are not reading as much and they are not buying books like they did in the past. If barnes and noble does come out with a new nook i will be in line to buy it.

  • Report this Comment On October 20, 2010, at 1:12 PM, whatsmiskta2maka wrote:

    It was Borders with the Kobo that first started the price war as it was introduced in May for pre-order at $169.

    B&N and Amazon HAD to follow suit otherwise they would price themselves out of the the market.

  • Report this Comment On October 20, 2010, at 3:57 PM, foolindeed1 wrote:

    Fool's site has been consistently - atticle after article - pounding on Barnes & Noble and bowing to Amazon's and Apple's digital efforts. Fool's "analysts" call Nook a failure many times no matter that it insistently outsold Kindle since it's launch. And now claim of Nook "not even making the dent".

    What is this statement based on? Do you know how many Kindles or Nooks was sold? You guys need to stop drinking Kool Aid, either it's Amazon's or Apple's.

  • Report this Comment On October 28, 2010, at 4:27 PM, BNRocks wrote:

    My wife and I wll be purchasing a Nook for each other for Christmas this year. The Nook has library borrowing access, lending to friends options, tons of free classics, tons of free google books material, a weekly free in store download, 1 hour of free reading of unpurchased books in store, and a store with employees to help with problems which put it ahead of Kindle or any other e-reader that I have heard of.

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