Amazon's Kindle Expected to Face Stiff Competition from Barnes and Noble's Nook

The Nook eBook reader from Barnes and Noble is said to be the most advanced eBook reader yet. It runs on the Android platform with built-in AT&T (News - Alert) 3G service and WiFi, along with an e-ink screen for enhanced reading experience.

There was unexpectedly high demand for Nook this holiday season, which made it go through its first production run in a hurry, according to an article on Techcrunch. This resulted in a small number of buyers failing to get their pre-ordered devices by Christmas.

Amazon has also released its own e-book reader, Kindle 2, which comes with a new svelte design, longer battery life, and an improved display. Amazon claims that online retailers’ customers bought more Kindle e-books than physical books on Christmas day.

As soon as it was released, the Nook e-reader quickly sold out its first 60,000 units. Though this number may not make the Nook a competitor to Kindle which is expected to sell 1.1 million in 2010, considering it was only announced on Oct. 20, and didn't begin shipping until early December, and wasn't available in most Barnes & Noble stores – meaning buyers either had to go online, or rely on a handful of 'higher volume' stores – its initial success should at least raise some eyebrows over at Amazon headquarters.

Nook’s biggest competitive strength is said to be its distribution network. For users to buy the Kindle, they have to visit the Amazon website to learn about the device and it is also difficult for consumers to get a first hand demonstration about the product’s features. But users can try out the Nook device at any of Barnes & Noble's 775 retail stores, and some of its 636 college bookstores.

Even if Amazon decides to sell Kindle via third parties, it is highly unlikely that retailers such as Wal-Mart and Best Buy would show any interest in selling a product that is been developed by their main competitor.

Encouraged by the unexpected rise in demand for Nook, Barnes and Noble has now targeted to sell 500,000 Nooks over the first three months of 2010. Even if they achieve 60 or 70 percent of that target that would mean Amazon has a serious competitor on its hands. Kindle is also expected to face a new slate of competitors most notably Apple's (News - Alert) rumored tablet device and Sony’s Daily Edition which are expected to ship soon. These devices may bring new innovations of their own which could take the e-reader spotlight from Kindle next year.