Barnes & Noble Unveils New Touchscreen Nook That Costs $139

Barnes & Noble Inc. (BKS), the target of a $1 billion bid from Liberty Media Corp., unveiled a smaller, lower-cost Nook electronic reader in an effort to boost its share of the growing e-book market.

The $139 touchscreen device has a 6-inch display (15- centimeters) and weighs 35 percent less than the original version, Chief Executive Officer William Lynch said today at a press conference in New York. The largest U.S. bookstore chain debuted the Nook in October 2009 and a year later released a color touchscreen version touted as a reader’s tablet.

Barnes & Noble has about 25 percent of the e-book market in the U.S. and trails only Amazon.com Inc. (AMZN), which introduced the Kindle e-reader in 2007. New York-based Barnes & Noble has increased its spending on the Nook as sales of paper books falter, leading to the bankruptcy of smaller rival Borders Group Inc. this year.

“We’re convinced this is the best value in the dedicated e-reader market,” said Lynch, who declined to answer questions about the bid from Liberty Media. The device can be purchased on the company’s website today and will ship and appear in stores and retail partners such as Best Buy Co. in June, Lynch said.

Barnes & Noble lowered the price on the original Nook, which it’s stopped making, to $119 from $149 for Wi-Fi and $169 from $199 for a version that connects to mobile-phone networks. The color version, which Lynch said was the second-best selling tablet in the U.S. behind Apple Inc (AAPL)’s iPad, remained at $249. The Kindle, which doesn’t have a touchscreen, starts at $114.

Digital Transition

“They are going back and targeting the user that wants something simple and easy,” Peter Wahlstrom, an analyst with Morningstar Investment Services, said in an interview. “They are trying to segment their customer audience between someone who will pay for a bare bones version and someone who will pay up for a tablet.”

Lynch said that the device can be used for two months on a single battery charge. The original could hold a charge for 10 days and the Nook Color can be used for eight hours, according to Barnes & Noble. The most-recent Kindle released in July has a battery life of a month, Amazon said in a statement at the time.

John Malone’s Liberty Media, announcing its $17-a-share offer for the bookseller last week, said Barnes & Noble was positioned for growth and “at the forefront of the transition to digital.” Barnes & Noble’s online revenue, where all digital purchases are recorded, rose 52 percent to $319.4 million in the quarter ended Jan. 29. Total sales climbed to $2.3 billion.

Barnes & Noble rose 73 cents, or 3.9 percent, to $19.32 at 4 p.m. in New York Stock Exchange composite trading. The shares have gained 37 percent this year.

Borders Competition

The February bankruptcy of Ann Arbor, Michigan-based Borders may reduce competition for Barnes & Noble, which put itself up for sale in August. William Ackman, who runs New York hedge-fund Pershing Square Capital Management LP, last year offered to back Borders in making an offer for Barnes & Noble.

Barnes & Noble sells the majority of Nooks in its stores, where it’s installed dedicated areas that allow shoppers to test devices and browse accessories. That strategy helped boost revenue at brick-and-mortar locations. Sales at Barnes & Noble stores open at least a year rose 7.3 percent in the quarter ended Jan. 29, the first gain since 2007.

Sales of digital books in the U.S. rose to $441.3 million in 2010, more than two and a half times the year-earlier number, according to the Association of American Publishers. E-books made up 8 percent of trade-book revenue last year, up from 3 percent in 2009.

To contact the reporter on this story: Matthew Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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