April 19 (Bloomberg) -- Barnes & Noble Inc. plans to release a software update to its Nook e-reader this week to stop the screen from freezing, increase its speed and offer a Web browser and games for the first time, a company executive said.
“We’re fixing the problem,” Anthony Astarita, vice president of digital products, said in an interview in his New York office on April 16. “Like any consumer product, you have issues that do come up. No product is 100 percent perfect.”
Barnes & Noble released the Nook in November, entering a growing market led by Amazon.com Inc.’s Kindle and Sony Corp.’s Reader. Apple Inc.’s new iPad tablet computer, out this month, increased competition. The Nook is fundamental to the retailer’s push into the digital market, since users will turn to Barnes & Noble first to purchase e-books, said Michael Souers, a New York-based analyst for Standard & Poor’s.
Sales of reading devices will grow to 5 million this year from 2.2 million in 2009, the Consumer Electronics Association estimates. E-books and the Nook represent about 3 percent to 5 percent of Barnes & Noble’s sales, said Souers, who advises clients to sell the company’s shares. That should double to about 10 percent within five years, he said.
Revenue in the four quarters ended Jan. 30 totaled $6.07 billion. The company doesn’t disclose sales figures for the Nook or digital books.
Barnes & Noble, based in New York, fell 52 cents, or 2.3 percent, to $22.14 at 4:02 p.m. in New York Stock Exchange composite trading. The shares have gained 16 percent this year.
Hundreds of Nook owners have posted complaints online, including on Barnes & Noble’s Web site.
“It freezes almost daily,” Stacey Hendricks, a student at University of Louisiana at Lafayette, said in an e-mail to Bloomberg. “Assuming Barnes & Noble doesn’t whip this situation into shape pronto, I’ll likely be switching over to the iPad.”
Barnes & Noble has updated Nook software twice before now. The latest update speeds page-turns, lengthens battery life, and adds Web browsing and free chess and Sudoku games, Astarita said.
Best Buy Co. began selling the Nook in its U.S. stores yesterday. Barnes & Noble also provides the digital bookstore for e-readers such as Plastic Logic’s Que and free software that allow users of devices such as Apple’s iPhone to buy and read its electronic books.
The bookseller decided to make an e-reader in August 2008 and began work on the Nook in February 2009 at its offices in Palo Alto, California, Astarita said. Given the speed of development, the company assumed the software would need updating, he said.
“It was one of those nail-biting scenarios that came down to the wire,” Astarita said. “It was that very reason that we made sure when we developed this product that we had the ability to do software updates and continually improve the product.”
Gloria Spink’s first Nook displayed garbled text. Barnes & Noble sent her a replacement last month. That one repeatedly froze, forcing her to open the device and remove the battery to unlock it, she said in a telephone interview.
“I said, ‘Enough and I want my money back,’” said Spink, a 63-year-old assistant buyer for Boyd Gaming Corp. in Las Vegas. “I returned the Nook and bought a Kindle online that same day.”
The Nook’s return rate, which also includes replacements, is below what the company expected, Astarita said, declining to provide specific numbers.
The retailer’s response to the freezing will determine the Nook’s success, Mike McGuire, a San Jose, California-based analyst for Gartner Inc., a technology research firm, said in a telephone interview.
“With hardware it’s not that there was a problem, it’s how you recover,” McGuire said.
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