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Why Barnes & Noble May Have a Kindle Killer


The new e-reader has the sleekness that Amazon's lacks.

This Thursday, Amazon (AMZN) will announce its third quarter earnings after the market's close. Analysts expect $5 billion in revenues and $0.33 per share in earnings. Shares of the online retailer have surged 170% since last November. While the market's recovery certainly had a hand, the jump is largely attributed to its popular e-book reader, the Kindle.

But even with the Kindle, the company may not be as cheerful this time next year.

Book retailer and major Amazon competitor Barnes & Noble (BKS) will be unveiling its own e-reader to the public today at a New York press event. Dubbed the "Nook," the device has much in common with the Kindle -- off-white casing, black and white electronic ink, downloadable content, etc. However, Barnes & Noble took a cue from Apple's (AAPL) iPhone and iPod Touch line and included a colorful, multi-touch interface at the bottom of the screen -- a giant leap in aesthetics from Kindle's chiclet keys.

Like the interface on Apple gadgets, the touchscreen will act both as a keyboard and a browser for title selections for wireless downloads. Barnes & Noble has yet to name the carrier that the Nook connects through, but the Google Books Project has an active involvement, so completists won't be left wanting.

But of all the advantages of the Nook, the feature that has everyone's tongue wagging is its ability to share titles with others. Amazon has yet to shake the bad press from July when the company egregiously removed copies of 1984 and Animal Farm without owners' consent. The company has attempted to make amends with users with vouchers and guarantees, but folks are still wary of its policies and abuse of digital rights. If Barnes & Noble allows free sharing between Nook owners -- or better yet, between anyone -- Kindle customers are going be mighty jealous.

The Nook will run off of Google's (GOOG) Android OS -- another plus for fans of open source -- and will cost $260, the same as Amazon's e-reader. And based on early word, this might take a bigger bite out of Kindle's market share than Sony's (SNE) e-reader.

The online retailer recently tried to play damage control by offering its American-based Kindle overseas -- the first time the device was available internationally since the debut of the first version in November 2007. But with an increasing number of sleek and user-friendly e-readers flooding the market in the coming months, Amazon has its work cut out for it.

Much to Jeff Bezos's presumable chagrin, Barnes & Noble's highly anticipated device will undercut any good news Amazon has to share on Thursday. If blogs are buzzing about a competitor on the onset of an earnings report, it might have an adverse effect on any gains that were to take place.

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