Kindle vs Nook 2 starts this week

This week, the Kindle finally gets a worthy competitor (we can hope, as it will push Amazon to lower prices and add features). The Kindle vs Nook 2 comparison/contest will hopefully revive the eReader landscape – which has been as boring as Two and a Half Men sans Mr. Tiger Blood.

Some rough predictions:

Monday, May 23rd: Amazon strengthens up its defences against Nook 2

Amazon makes 2-3 moves to reinforce the Kindle’s charms to current and prospective Kindle owners.

Probably more free book offers than usual. Perhaps a date for when Library Lending will arrive. Amazon will wait until it knows the details of Nook 2 before launching a full attack – However, if information leaks out today, it might move early.

Tuesday, May 24th: B&N finally reveals Nook 2.

Haven’t been this excited since Dairy Queen introduced a new flavor (or was it Baskin Robbins).

  1. Features most likely to be part of Nook 2 – $150 price, improved lending, eInk Pearl screen with optimizations to make the screen contrast slightly better than Kindle 3′s screen contrast, touch using IR technology (the way it’s done in the new Sony Readers), text to speech (50% chance it makes its way in).
  2. Features most likely to be part of Nook 2 WiFi – $125 price.
  3. Slight possibility – B&N forsakes 3G totally and introduces only a WiFi model.
  4. 5% possibility – B&N blows Kindle 3 out of the water by introducing a Qualcomm Mirasol powered color eInk eReader.
  5. The most interesting possibility to me is B&N introducing a Nook for Kids. That would totally derail Amazon’s push into schools. It’s not inconceivable that B&N will release both a $150 Nook 2 and a $100 Nook for Kids. After Nook Color, it would be foolish to underestimate B&N’s capacity to surprise.

How will Amazon respond?

Amazon will probably make at least 2 big announcements on the 24th to deflect some of the attention away from Nook 2. If the 5% possibility turns out to be true (Nook 2 has a color eInk screen) then look out for some falling Kindle prices. If Nook 2 comes in at $150, or seems to offer more value for money than Kindle, then Amazon will probably do a $25 Kindle price-cut or offer a $25 gift card with the Kindle.

It’s unlikely that Amazon would have an answer for Nook for Kids.

Amazon probably has a clear-cut strategy and execution plan for responding to Nook 2 -

  1. A few features it has implemented but not introduced. It will definitely announce a few new features this week.
  2. The date for library book support and perhaps even a date for ePub support.
  3. A few new WhisperNet related services.
  4. Perhaps expansion of the Kindle App Store internationally and the introduction of free Internet browsing for all Kindle owners (not just those in the US). These two are especially likely if B&N does an international launch for Nook 2.
  5. A few special offers on bestsellers and perhaps even a few Living Social deals.
  6. Perhaps a subscription plan.
  7. Perhaps a Kindle+Prime subscription deal.

Amazon will probably announce 2 or 3 big things immediately if it feels Nook 2 is a real threat. If not, it might save them up to hand out over the course of the summer.

Wednesday & Thursday (May 25th and 26th) – Spy vs Spy

Time for B&N and Amazon to decide how they will fight the Kindle vs Nook 2 battle. To fathom out each other’s strategies and attack.

B&N will probably do a repeat of its ‘announce a month or two before release’ strategy with Nook 2. That gives Amazon ample time to respond. If it feels it’s been left behind technologically, it might prepone the Kindle 4 release to end of this year (from February 2012).

The real advantage B&N can get with Nook 2 is hardware/technology. In particular a touch screen and/or a new screen technology. While Amazon can match software improvements easily it will be stuck if B&N introduces one or more clear hardware advantages.

B&N might make some other moves – stronger tie-up with Google, a partnership with Apple, expansion of book lending. None of them would be game changers though. It’s hard to think of anything other than hardware improvements that could have huge impact – perhaps a subscription plan B&N introduces in partnership with Publishers.

Could B&N pull off something in the software space? Software is hardly its area of expertise – but you never know. Hardware wasn’t its area of expertise either and it managed to produce the best non-iPad tablet.

Rest of May 2011 – The Kindle vs Nook 2 battle is decided (in effect)

How strongly Amazon responds to Nook 2 will be a clear indicator of whether it sees Nook as an after-ran in the eReader market or whether Nook really has captured 23% to 25% of the eReader market (DigiTimes mentioned this figure).

If Amazon does not have a Kindle 4 slated for launch in October or November 2011, and there’s a high probability it doesn’t (since it’s probably waiting to release a color eInk based Kindle in Feb 2012), then we will see it respond to Nook 2 very, very agressively.

If B&N introduces a Nook for Kids then Amazon is likely to struggle mightily to respond. It’s ignored the student eReader market (school and college) and B&N might wrap up a large portion of that market even before Amazon can release something built for students.

2011 is going to be a great year to be an eReader owner – current or prospective.

Kindle vs Nook in 2011

Please Note: This is a Kindle vs Nook strategy review + predictions post. For a device comparison, check out my Kindle vs Nook Review.

The Kindle dominated most of 2010 due to Kindle 3 and Kindle WiFi being an entire generation ahead of the Nook 1. It also helped that Kindle WiFi was at a ridiculously low $139.

Nook Color dominated two emerging markets in 2010 – Reading Tablets, low-price and high-quality non-iPad Tablets. It had no competitors – it still doesn’t.

2011 promises to be different.

Kindle vs Nook in 2011 – Context & Thoughts

With Nook 2 and Nook 2 WiFi probably arriving on May 24th, and with Kindle Tablet rumored to be arriving in the second half of 2011, we suddenly have Kindle vs Nook take on a very different complexion.

  • Kindle 3 and Kindle WiFi will finally get a worthy competitor. If Nook 2 is as good at attacking Kindle weak-points as Nook 1, we’ll have a really exciting 2011.
  • Kindle Tablet will challenge Nook Color. It’s probably not lost on Amazon that if B&N keeps selling 800,000 Nook Colors a month the Nook Color might single-handedly resuscitate B&N.
  • Nook Color’s status as the absolute best reading device for reading at night will probably be threatened.
  • The iPad will become far less relevant for people looking for a reading device. A $249 Nook Color was compelling. Add on a decently priced Kindle Tablet and we might find that noticeably fewer people are buying iPad for reading.
  • A good rivalry will reinvigorate eReaders. Kindle 3 came out a year ago – There haven’t been any hugely significant advances since then. Nook 2 will force Amazon to evolve.
  • Prices will get cut further – increasing the number of people buying reading devices, increasing the percentage share of ebooks.
  • Kindle vs Nook (as opposed to Kindle vs iPad or Nook Color vs iPad) will become the major storyline for readers in 2011.

May 24th might mark the beginning of the Age of Reading Devices. A time when eReaders and Reading Tablets start selling tens of millions of units a year and begin to dominate all of Publishing. 

Kindle vs Nook in 2011 – Kindle Tablet vs Nook Color

Kindle Tablet vs Nook Color will be the battle for casual readers. Not an ‘empty as a Politician’s Speech’ + ‘make animated page turns and forget to get books in the store’ pretend-battle. This will be a real battle.

The most amusing part of it is that both sides will probably be using closed ecosystems built on Google’s ‘open’ Android ecosystem. B&N already uses Android. Amazon’s focus on building its own Android App Store suggests it’s thinking of using Android for its Kindle Tablet.

Here are some things that will define this battle -

  1. Will Amazon release a Tablet or a Reading Tablet? My guess is that Amazon will try an Apple-style ‘it’s great for reading and for 1,000 other things’ strategy. A general Tablet from Amazon would fail to effectively counter Nook Color.
  2. What price will the Kindle Tablet be at? Nook Color’s $249 price is a big part of its appeal and competitive power.
  3. What does B&N have planned for the Nook Color? It already has email, a social network, and an App Store. If B&N keeps adding more high-value features, or if the Nook App Store takes off, then the Nook Color might become the story of 2011. 
  4. The Nook App Store has got off to an interesting start. There’s no way it can compete with Amazon’s Android App Store in a broad sense – However, it might be able to compete effectively when it comes to ‘Apps for Reading Tablets’ and Apps built to help readers.
  5. Can Amazon channel Android Apps into a powerful App Store? In some ways it seems almost too easy – Just take all the good apps from the Android Market and make your own store. Will it work?
  6. What will casual readers think of the Kindle Tablet?
  7. Will Nook Color end up being a Reading Tablet for readers, a cheap and hackable General Tablet for techies, or a mix of both?

The two App Stores really are the wild cards. It’s a tough exercise – both Amazon and B&N are trying to ensure quality and quantity.

Prediction: Amazon misses the mark and releases a general Tablet. It has little impact on the Reading Tablet market and very little impact on reading in general.

Kindle vs Nook in 2011 – Kindle 3 vs Nook 2

Kindle 3 vs Nook 2 is the battle of the full-featured eReaders.

A battle for hardcore readers willing and able to pay for a full-featured eReader. This is the single most important battle. The lower priced versions might get more device sales - but it’s these main-line eReaders that will capture far more book sales.

Nook 2′s ability to compete with, and perhaps even beat, Kindle 3 depends on 5 factors -

  1. Will Nook 2 leap-frog Kindle 3 technologically? Adding in Mirasol displays would qualify. Adding in just touch would not.
  2. What price will Nook 2 be at? If B&N can come in at $150 for Nook 2, with a feature-set that matches Kindle 3, it’ll put Amazon in a tough spot. 
  3. Does B&N have some hidden trump card? At various times, and for varying lengths of time, Nook has had various advantages over the Kindle – PDF support (it wasn’t there in the Kindle when Nook 1 was announced), Library Book Support (Amazon has promised this will arrive in 2011), Lending (until end 2010, only Nook had Pretend-Lending), and so forth. If B&N can create a new advantage that is as significant as any of these, it will have a powerful new weapon.
  4. Can B&N distribute and sell Nook 2 as well as Amazon distributes and sells Kindle 3? B&N still doesn’t sell Nook internationally, and its advantage in retail has been whittled down as Amazon is now available at WalMart, Best Buy, Staples, and several other retail chains. If B&N can find a way to distribute Nook internationally, or if it can find some retail distribution advantages in the US, it can tilt the contest in its favor.
  5. Could B&N use Amazon’s enemies against it? The list of Amazon’s enemies seems to grow by the day – Google, WalMart, State Governments, Publishers. If B&N can get help from one or more of these parties it stands a better chance. By the way, it’s inexplicable that WalMart is selling Kindles – Isn’t Amazon the company that shot WalMart’s dog when it killed Amazon’s pet rabbit?

Nook 1 was a surprisingly strong contender to the Kindle when it came out. Nook Color was even more impressive (though not a direct Kindle competitor). If B&N meets the bar it has set with Nook 1 and Nook Color, Nook 2 will give Kindle 3 a real run for its money.

Kindle vs Nook in 2011 – Kindle WiFi vs Nook 2 WiFi

Kindle WiFi vs Nook 2 WiFi is the battle of the low-priced eReaders.

A battle for readers at the intersection of casual and hard-core. A battle for readers at the intersection of ‘able to spend $189 on an eReader’ and ‘able to spend only $99 on an eReader’.

The main-stream media is fixated on this. But it isn’t really the battle that will define who wins the Publishing War. It’s more of a contest of who gets higher total eReader sales. Winning this and losing the Kindle 3 vs Nook 2 battle would be pretty painful.

A lot of the factors here are similar to what we discussed in the Kindle 3 vs Nook 2 section – technological advantages, price, hidden trump cards, distribution, using Amazon’s enemies as friends.

Price sensitivity is the main factor and B&N has a lot of places it can cut costs – the LCD being one obvious area. If Nook 2 WiFi can hit $99, B&N will win the lower end of the market. Given that the Nook Color comes in at $249, there’s no reason B&N can’t release a $99 Nook 2 WiFi. 

The other main factor is a strange one – promising more value for money by offering things that aren’t necessarily reading related. If B&N can bundle in a free email client, a few basic free tools, and one or two other value-add features – It will win. WiFi isn’t costing B&N anything. Neither are Apps.

Users would prefer a $99 eReader+eWriter+Email Device over a $99 eReader.

B&N could turn the ‘readers won’t pay more than $99 for an eReader’ theory on its head by providing a device for $99 that isn’t just a great eReader – It’s also a great email client and a great productivity tool and a great eWriter.

Kindle vs Nook Closing Thoughts

The success of the Nook Color has re-energized B&N. You see it in the moves it’s making – Adding an email client to Nook Color is a big deal. As is the Nook App Store. Flash support is pretty impressive too.

We’re dealing with a company that has suddenly discovered it can keep up with the technology big boys - perhaps even beat some of them. Nook Color proving itself to be the best Android Tablet (in terms of value for money and usefulness and perhaps even looks) has to have had some effect on B&N. An effect that ought to be evident in the feature-set for Nook 2.

2011 is going to be the Year of Kindle vs Nook and the beginning of the Age of Reading Devices. Not a year when iPad makes eReaders redundant but a year in which eReaders and Reading Tablets use technology to revitalize reading and further hasten the destruction of the existing Publishing hierarchy. The winner of Kindle vs Nook will be in prime position to take over all of Publishing. The loser will have to settle for billions of dollars a year in revenue from eBooks and eReaders.

New Nook – Nook 2 to take on Kindle 3

We might see Nook 2 arrive and take on Kindle 3 within the next few weeks.  Will Nook 2 turn out to be a decent challenger to the Kindle 3′s status as ‘best reading device’?

Well, we’ll have to see. Hopefully, we’re in for an epic Kindle 3 vs Nook 2 battle with lots of price-cuts and feature-matching.

B&N revealed yesterday (rather indirectly) that a new Nook eReader will be unveiled on May 24th, 2011. The logical assumption would be that B&N is releasing the second version of the Nook eInk eReader – as opposed to a newer Nook Color. If it’s done right, it’s likely to have quite an impact on the eReader world.

First, two links -

  1. David Carnoy at Crave thinks that, on May 24th, we will probably see an eInk based Nook 2.
  2. Update: Forrester’s James McQuivey also thinks an eInk based Nook 2, a direct competitor to the Kindle 3, will be unveiled. The rest of the world is wedded to the possibility that a Honeycomb-powered Nook Color 2 will be announced.
  3. B&N’s SEC Filing talks about the new Nook eReader.

    Item 7.01. Regulation FD Disclosure.

    In a meeting with investor analysts on May 4, 2011, Barnes & Noble, Inc. (the “Company”) indicated it expects to make an announcement on May 24, 2011 regarding the launch of a new eReader device.

Next, let’s look at why this is likely to be a Nook 2, and not a Nook Color 2 or a 10″ Nook Color XL.

Why this is likely to be an eInk based Nook 2, and not a Tablet

Reasons the new B&N eBook Reader is likely to be eInk based Nook 2 -

  1. It’s been 1 year and 6 months since Nook 1 was released. It’s been 6 months since Nook Color was released. A Nook Color 2 just seems unlikely - What company releases a new model 6 months after the first ‘Is there a market for this?’ version comes out?
  2. B&N just released a major software update for the Nook Color and an app store. It’s a bit unlikely it would do that just a few weeks before releasing Nook Color 2.
  3. B&N will probably wait to see what Kindle Tablet is like before releasing Nook Color 2. There’s a chance Kindle Tablet is not a reading tablet and aimed at iPad. In that case, B&N won’t have to worry much about competition for the Nook Color.
  4. Kindle 3 is taking Nook 1 to the dryers. Nook Color is taking all non-iPad Tablets to the dryers. A Nook 2 is obviously needed a lot more than a new Nook Color.
  5. B&N’s Nook does not have the new eInk Pearl screen – which puts it at a significant disadvantage when compared to the Kindle 3 and the newer Sony Readers.
  6. Nook was already facing a price disadvantage due to the $139 Kindle WiFi. The $114 Ad Kindle further increases Kindle’s appeal to price-conscious customers. B&N has to respond.
  7. Hardcore ebook buyers tend to prefer eReaders with eInk screens – which makes it imperative for a book seller like B&N to compete head-on with Kindle via a new beefed-up Nook 2.
  8. Nook2.com is registered to a B&N employee. Potential other Nook 2 names like NookTouch.com are registered to either B&N or to B&N employees.

There are lots of good reasons for this new device to be the Nook 2. However, let’s play devil’s advocate and see if a new Nook Color makes sense.

Reasons B&N’s new eReader device might be a 10″ Nook Color XL or a Nook Color 2 -

  1. Perhaps B&N has been so impressed by the success of the Nook Color that it has decided to launch a 10″ version.
  2. Perhaps B&N doesn’t want a legal fight with Microsoft over Android and is switching to another Operating System. Nook Color 2 might just be Nook Color without Android and with a few minor changes. One thing that’s really puzzling is why Microsoft would choose to sue Barnes & Noble of all companies. Why go after a (relatively) small company selling a $249 Reading Tablet when there are much larger companies using Android? Perhaps Microsoft thinks it can beat a small company and then use that legal precedent to go after giants like Samsung and Sony.
  3. B&N might want to use Google’s Honeycomb OS as it’s optimized for Tablets. We know that Honeycomb runs on hacked Nook Colors but Nook Color is a reading tablet and not a full tablet. Perhaps B&N decided to build a Tablet better suited to Honeycomb, i.e. a full Tablet.  
  4. [Assumption] B&N might be seeing 800,000 sales a month of the Nook Color and 200,000 sales a month of the Nook. It might have decided to quit pure eReaders and focus on Reading Tablets.
  5. B&N might have decided to take a proper shot at the tablet market. There is huge demand for a non-iPad tablet – to the point that people are using a Reading Tablet (Nook Color) as a Tablet.

There are some good reasons for B&N to release a Nook Color 2 or a 10″ Nook Color XL. The biggest question mark is the timeframe - It’s only been 6 months since the launch of the Nook Color. Launching now would mean B&N started planning and designing Nook Color 2 at least 9 months ago. That’s 3 months before Nook Color launched and proved to be a success.

It’s safe to assume there’s an 80% chance this is a Nook 2. A new Nook that will set up a glorious Kindle 3 vs Nook 2 fight. Let’s speculate on what Nook 2 might be like.

What will Nook 2 bring to the table?

B&N has seen Amazon take the 2009 Holiday season due to Nook shortages. It has seen Amazon take the 2010 Holiday season due to a newer Kindle release and lower prices.

With that context in mind, it’s quite likely that B&N will try for a double pronged attack of lower price and advanced technology (technology advanced enough to match or exceed the Kindle WiFi).

Nook 2 will probably have -

  1. The new eInk Pearl screen. A very high chance.
  2. Mirasol screen technology. A low 5% chance. If B&N does manage to release Nook Mirasol on May 24th, it’ll completely dominate the eReader market until an equivalent Kindle Mirasol comes out.
  3. Pixel Qi screen technology. A low 5% chance. This might not be as much of an advantage as Mirasol, but it’ll be a significant one.
  4. No LCD screen at the bottom. Trying to make an eInk screen work with an LCD screen is a terrible idea. It hampers usability and adds costs and is just a lack of purity in design.
  5. Nook Apps. If B&N releases a Nook 2, it is almost certainly going to extend the Nook App Store to the Nook 2.
  6. Only WiFi. A high probability that Nook 2 doesn’t have 3G since B&N will be doing everything it can to cut costs.
  7. An Email Client. B&N just added one to Nook Color. It would be easy to add the same Email Client to Nook 2.
  8. Nook Lending Network and Nook Friends Social Network.
  9. Some feature(s) we haven’t thought of.
  10. It’ll obviously have ePub support and library book support. The latter is an advantage until Amazon actually adds library book support to the Kindle. The former will probably stay an advantage for a long time.
  11. It might stick with an SD card slot.
  12. High probability it will be lighter and thinner. While Nook 1 is around the same length and width as Kindle, it’s noticeably heavier and thicker.
  13. Speed Improvements and Fewer Bugs. Nook 1 had quite a few bugs and tended to be a bit sluggish. If B&N drops the LCD screen it’ll solve part of the problem (the LCD makes the eInk seem sluggish plus the LCD+eInk synchronization causes problems).
  14. An evolution of LendMe (the lending feature). Amazon matched the LendMe feature late last year and took away a major B&N advantage. Nook 2 might have a better lending feature – especially since Publishers will be eager to prevent Amazon from completely dominating eReaders and eBooks. 
  15. Better Battery Life. Thanks to the LCD screen at the bottom, the Nook 1 always struggled a bit when it came to battery life. If the LCD is gone B&N’s Nook 2 might compete with Kindle 3 on battery life.
  16. Touch. Sony showed how to add touch without depending on eInk (the company making eInk and canned sloth juice). B&N might decide to do the same (IR based touch).
  17. Multi-level Folders. Rather unlikely given the complexity – but it would be one thing B&N could claim to beat Kindle on.
  18. Better Security and Parental Controls. If B&N can add parental controls and add to its existing security options it can get another advantage over the Kindle.
  19. Microphone. Kindle 3 has a microphone that isn’t used for anything. B&N might add one and perhaps even use it for something.
  20. Text to Speech. This is a major Kindle advantage and B&N might finally get around to matching this.

There’s a lot of room for improvement. Nook 2 has a lot to do to catch up with Kindle 3 and it also has the opportunity to steal a lead. Kindle 3 vs Nook 2 is going to be a very important and very interesting battle.

Kindle vs Nook twist. A world with just Nook WiFi and Nook Color?

The Kindle 3 might be losing its biggest competitor – or perhaps it will soon face a newer, updated version of it.

There is a rumor that -

  1. Nook 3G production is being stopped.
  2. Nook 3G sales will only continue until current stock is exhausted.
  3. B&N is encouraging retail partners to not take bulk orders for Nook 3G.
  4. Demand for Nook WiFi is/was much higher than for Nook 3G.
  5. There might be a Nook 2 with eInk Pearl around the corner.

All these rumors, centered around a dwindling supply of Nook 3G, stem from an unidentified source within B&N itself that Engadget claims to be in bed with. It must be a very confusing relationship, the sort where you have to put Its Complicated as the relationship status, because the source has produced zero actual evidence and seems to have no idea whether a Nook 2 is on the way.

It’s rather interesting news. There are two distinct possibilities here -

  • B&N is going with a $149 Nook WiFi and a $249 Nook Color.
  • B&N is releasing a $189 Nook 2 to take on the Kindle.

It surprises me a little bit but my gut feeling is that the first option might be the better one for B&N.

Why a $149 Nook WiFi and a $249 Nook Color make a lot of sense

A world without Nook 1 wouldn’t be a huge loss.

Nook 3G wasn’t like the Kindle 3G – It didn’t have free Internet bundled in, and it didn’t have a ton of add-on features like popular highlights. 3G adds on a lot of costs – Amazon is, after all, subsidizing the free Internet and the 3G book downloads.

With a Nook WiFi, users are providing the WiFi or using free WiFi. Which means no download charges for B&N to contend with.

If B&N is seeing 3 Nook WiFis sold for every Nook 3G sold, then it might as well switch over to Nook WiFis completely. Plus we avoid all the confusion by having just one model – consider all the people in analysis paralysis over the Kindle 3G vs Kindle WiFi decision.

Nook Color makes a huge difference

The value for money Nook Color provides is incredible. Was just reading The City and the City on it, and it is so much better than iPad for reading it is not even funny.

Kindle 3 is a good prospect if you do not like LCDs or want the new eInk Pearl or the free 3G. However, Kindle WiFi and Nook Color are the value-for-money champions. With Nook 1 you get neither the new eInk Pearl screen nor the free Internet browsing. It just doesn’t compare that well to Kindle 3.

Nook WiFi at $149 is identical to Nook 3G. Most users were probably choosing it. On top of that you have the fact that 3G support was probably costing B&N a lot.

Finally, by leaving out the Nook 3G entirely, B&N can shift the Kindle vs Nook comparison to Kindle 3 vs Nook Color – a comparison in which it has several advantages such as touch and color and newness.

The downsides

There are obvious downsides to disbanding the Nook 3G.

Firstly, the Kindle 3 no longer has any credible eInk based competitors. Secondly, B&N no longer has a high-end eInk eReader. Thirdly, a lot of people love 3G for the convenience.

Basically, switching to WiFi-only Nooks reduces convenience for customers and at the same time it makes things easier and less costly for B&N. A difficult exchange to pull off successfully.

B&N would take a big risk by having no Kindle 3 competitor in its arsenal.

It makes you wonder if perhaps the real reason the Nook 1 is being discontinued is that Nook 2 is ready.

Why a Nook 2 would also be a good idea

B&N would be able to compete much more effectively with the Kindle 3 if it produced a really good Nook 2.

If B&N were to match all the Kindle 3 features, while keeping 3G and keeping library book support, it would have an eReader as good as, or even slightly better than, the Kindle 3. Amazon would still have the slightly better ebook store – However, Nook 2 would match Kindle 3 on the eReader level.

At that point, B&N could leverage its strengths - foot traffic at its stores, retail partnership with Wal-Mart, library book and ePub support – to make a really strong push.

Who B&N loses if it discontinues Nook 3G

It would be customers who – wanted an eInk screen, wanted 3G in their eReader, did not mind paying $50 extra for 3G, did not mind paying $199 for an eReader.

A lot of those customers probably prefer Kindle 3 – it has the new eInk Pearl screen, it has free Internet browsing, and it is $10 cheaper.

So, B&N might not really lose that much.

Nook vs Nook WiFi vs Nook Color based on my reading experience with each

Firstly, there is virtually zero difference between Nook and Nook WiFi. By eliminating Nook 3G all that B&N loses is the 3G feature. It is really not a big deal.

Secondly, Nook Color is marvellous. It does what iPad does not – allow decent reading on a LCD screen.

B&N has got to be a bit concerned about not having anything to take on Kindle 3 – However, Amazon should be super concerned about not having anything to take on Nook Color.

If Amazon wants to be optimistic it can simply say – B&N has given up on ever beating the Kindle 3.

If Amazon wants to be pragmatic it needs to consider – Perhaps a Nook 2 is in the works. Perhaps Nook Color is doing so well that B&N feels it does not need a Nook 3G any more.

What might B&N add to Nook 2?

The Kindle is a third generation eReader that improves greatly on the Kindle 2.

Kindle 2 and Nook were neck to neck, with Kindle edging ahead because of a better ebook store and better infrastructure. However, Kindle 3 features like the new eInk Pearl screen and really good battery life make Kindle 3 a clearly better choice than Nook. 

You’ll usually be picking Kindle 3 over Nook 1 – Unless you need ePub support, library book support, or prefer B&N over Amazon. B&N needs a Nook 2 that is really, really good to compete effectively with Kindle 3.

B&N has shown, with the Nook Color, that it can create really impressive devices and that it’s getting better at this hardware stuff. Now, it just has to create and release a Nook 2 that can take on the ‘bestest sellingest eReader ever’.

What might B&N add to Nook 2?

First, we have the obvious candidates -

  1. eInk Pearl. This is an absolute must-have.
  2. Touch. Perhaps something like Sony Reader’s InfraRed based touch.
  3. Faster page turns. This is another must-have
  4. Better battery life.
  5. Smaller Size.
  6. Lower Weight. Nook 1 weighs quite a bit more than Kindle 2 and Kindle 3 - It’s time for B&N to cut down on weight.
  7. International availability. B&N can easily increase its sales 50% or more by shipping Nooks worldwide. It will have to add bookstores for countries other than the US.

These are the things B&N is quite likely to add to Nook 2.

Next, we have the long shots -

  1. Mirasol display or eInk Triton (color eInk).
  2. Lower Price – B&N managed to release Nook Color at $250. It needs to create a similarly magical price for Nook 2.
  3. Elimination of the touchscreen at the bottom.
  4. Text to Speech. This is a really valuable feature. Now that Kindle has matched Nook’s LendMe feature, it’s time for B&N to add Kindle’s text to speech feature.
  5. Speech to Text. Might as well add this alongside Text to Speech.
  6. A Nook 2 App Store. The current Nook App Store is only for Nook Color. To effectively compete with Kindle, the Nook 2 will need apps sooner or later. Might as well add support for apps now.
  7. 7″ screen. Not sure if eInk can provide a 7″ screen for Nook 2. If it can, this would be a great move.
  8. Completely different, very simple UI. B&N might create a very simple, easy interface for Nook 2. If it did, it would really help.
  9. Multi-level folders. An instant advantage over Kindle.
  10. Much better PDF support. Hard to see this happening as PDFs on 6″ screens are really difficult to get right.
  11. Further retail availability. B&N already sells Nooks at Wal-Mart and BestBuy and Target. Perhaps there’s an opportunity to expand beyond these stores.
  12. More color choices.

It’s unlikely B&N will be able to get color eInk into Nook 2. A lot of the other long-shots are doable, and B&N might sneak in a few.

Finally, we have the crazy possibilities -

  1. Free Internet via 3G. Very unlikely as this is probably really expensive.
  2. Sub $100 price. Might B&N make Nook 2 a Kindle WiFi competitor, instead of a Kindle 3 competitor?
  3. Expand the Lending feature.
  4. Remove its password protection DRM, and make Nook store ebooks readable on any eReader that supports Adobe DRM. This will allow Nook owners to migrate to any eReader they want to – It’s therefore unlikely that B&N would do this.
  5. Support for Audible audiobooks. It’s unlikely B&N would support a rival.
  6. A physical keyboard. Given what it’s done with Nook Color a touchscreen is far likelier.
  7. Stylus and handwriting support.

These are all pretty unlikely. There is a slight chance B&N goes for a sub-$100 price – but not much.

What should B&N add to Nook 2?

That’s a tough question to answer.

Option 1: The $99 Nook 2

B&N could make a big splash by going with a $99 budget Nook 2.

This would have – eInk Pearl, no touch, very simple user interface, faster page turns, better battery life, much smaller size, lighter weight, text to speech, speech to text, no touchscreen at the bottom, WiFi only, Nook Apps, much better PDF support.

It would also be available internationally.

Option 2: The $199 Color Nook 2

B&N could make an even bigger splash by going with a $199 Color Nook 2.

This would have – eInk Triton for a color screen, 7″ screen, flexible screen that’s hard to break, very simple user interface, touch with stylus and finger support, WiFi and 3G, faster page turns, better battery life, text to speech, speech to text, voice commands, Nook Apps.

Again, it would be available internationally.

Perhaps Both – A Nook 2 and a Nook 2 WiFi

Nook WiFi needs an update just as much as Nook does. Perhaps it’s time for B&N to introduce a Nook 2 and a Nook 2 WiFi. There could be a no-frills $99 Nook 2 WiFi to target people with a low budget. The $199 color eInk Nook 2 would target readers who don’t mind paying $200 for a state-of-the-art eReader.

Nook 2 probably won’t have a color screen, might arrive by March 2011

The big problem with color eInk is that it isn’t really ready. 

We have no idea when eInk Triton will be ready. Mirasol will be arriving in PocketBook Color in Q3, 2011 – which probably means the actual release will be in Q2, 2012.

There are a few companies doing color eReaders, but these aren’t being brought to the US. Fujitsu has been releasing frighteningly expensive color eReaders in Japan for the last 2 years – However, it isn’t releasing anything here. Hanvon has a color eReader that it’ll release this year in China – but it has no plans to bring this color eReader to the US.

B&N might want to release a color Nook 2, but it doesn’t have any color ePaper options. That leaves it with things like flexible screens, touch screens, software improvements, and 7″ and 8″ screens.

Not being able to bring a color Nook 2 to market soon makes it harder for B&N to compensate for Kindle 3′s supporting cast – the Kindle Store and Kindle WhisperNet. Two of the most significant moves B&N could make, to improve Nook 2′s chances, are -

  1. Improve the Nook Store.
  2. Provide more Cloud based features. B&N has an opportunity here as Amazon has been too focused on non-core additions like Twittering and Sharing Highlights. If B&N delivers a great social feature like book clubs, or a social network related to reading, it could turn an area of weakness into an area of immense strength.

Nook Color has been a huge hit for B&N. Nook 2 is going to be one of the most highly anticipated releases of 2011. Will B&N deliver a Nook 2 as impressive as Nook Color?

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