Microsoft Surface Could Kill the Barnes & Noble Nook

New tablets, including one from Microsoft, could make the Nook E-reader redundant.

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Microsoft's plan to introduce a new tablet computer, the Surface, has set the stage for a three-way battle with fellow giants Apple and Google in the booming tablet market.

So where does the humble Nook E-reader fit in? Possibly nowhere.

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Barnes & Noble, the big bookselling chain, introduced the Nook for good reason in 2009. Amazon, B&N's top competitor, was threatening to corner the market on E-books, thanks largely to the Kindle reader, launched two years earlier. Third-party E-readers didn't catch on, which left B&N with no real choice except to copy Amazon and launch its own branded device, to give online consumers a reason to choose B&N over Amazon. The Nook now comes in several varieties and is generally popular among people who use it.

Its relevance is another question. Tablet devices seem likely to become as ubiquitous as laptops and smartphones, with those that are the most versatile winning out. Laptops aren't single-purpose devices. Neither are smartphones, which people now use to communicate, stream music and video, take pictures, play games, provide GPS guidance, bank, and shop. So what's the point of a Nook that is mainly used for reading?

Nook defenders will point out that some versions of the gizmo can do many of the things other tablets can do, with Web access, thousands of available apps, and plenty of storage for songs, shows, and movies. But all that does is make the Nook a me-too product in a market--tablet hardware--that isn't B&N's core business.

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The Kindle Fire—the Nook Tablet's most direct competitor—has a more definitive purpose. Amazon started as a bookseller, but it has morphed into a huge retailer, more similar to Wal-Mart than to a niche chain. The Kindle is a portable storefront, clearly designed to provide easy access to the millions of products Amazon now sells. But B&N is still a bookseller, with no other products to peddle besides old staples like music and DVDs.

Meanwhile, Nook software is available for Apple's iPad and for tablets running Google's Android software, which means just about anybody with a tablet can now download books seamlessly from Barnes and Noble, if that's who they want to buy books from. The whole purpose of the Nook was to draw E-book customers and prevent them from fleeing to Amazon. The software now accomplishes what the hardware was designed to do.

Microsoft, meanwhile, invested $300 million in Barnes & Noble earlier this year, forming a partnership involving the company's Nook division, which includes the E-reader and all the company's digital content, including textbooks.

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Hmmm. That digital content clearly represents something Microsoft doesn't have. But the Nook will start to look redundant once the Surface debuts—especially since the Surface seems sure to support Nook software. The only argument left for the Nook might be its lower price point, since the Nook ranges from $99 to 199, less than half what an iPad or similar tablets cost. Yet as tablets become ubiquitous, prices will fall, more varieties will become available, and smartphones will fill the gaps at the lower end of the market. The turf inhabited by the Nook could shrink to the size of a postage stamp.

This could all take a couple of years, and B&N, meanwhile, is investing in its Nook division, which will soon move into new digs in Silicon Valley. But the reader is a small part of the Nook division, and there's plenty of work to do building out digital content and developing the software that will help people find and manage it. The Nook division could easily carry on without its namesake device.

B&N, of course, would never acknowledge the anticipated demise of its E-reader, since then nobody would buy it and digital sales would fall. But the Nook may very well end up representing a bridge strategy, with the obsolescence of the device itself not being that big a deal.

As publishers and broadcasters have already learned, it doesn't really matter anymore how your material gets delivered. The only thing that matters is that it does get delivered. Once Barnes & Noble feels confident that there are plenty of pathways customers can take to find its books and other products, the Nook may have done its duty.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.