UPDATE 2-Delay in Barnes & Noble's Nook seen as setback

Mon Dec 7, 2009 2:01pm EST

Related Topics

* Nook debut in stores delayed until early 2010

* Barnes & Noble focusing on fulfilling current orders

* Most buyers likely to be patient, wait for Nook-analysts

* Shares down 2.9 percent (Adds analyst and company comments, share price, byline)

By Phil Wahba

NEW YORK, Dec 7 (Reuters) - Efforts by Barnes & Noble Inc (BKS.N) to get its Nook electronic reader into customers' hands suffered another setback on Monday, when the bookseller said it was postponing the in-store debut of the device until early 2010 to fulfill orders already received.

Barnes & Noble said just eight days ago that it would ship the newly launched Nook to its highest-volume stores on Dec. 7 to allow customers to buy an e-reader and take it home. [ID:nN29420464]

For now, only demonstration models are available in stores.

While analysts caution further delays could steer wavering e-reader buyers to rivals, such as the Kindle e-reader from Amazon.com (AMZN.O) and Sony Corp's (6758.T) (SNE.N) Daily Edition device, they do not expect this latest snag to hurt Nook's market share in any lasting manner.

"You'll have some people thinking the Nook is the ideal holiday gift but they might look at a Kindle instead," said James McQuivey, a media analyst at Forrester Research.

But the Nook's unique features and the loyalty of Barnes & Noble customers will inure it against a backlash, he said.

Because the Nook allows users to download books from public libraries and from other sources, unlike the Kindle which only allows downloads from Amazon, customers are willing to wait, Gartner Vice President Allen Weiner said.

"The products are apples and oranges," said Weiner. "I don't know that the (Nook's) benefits have been marketed properly."

A spokeswoman for Barnes & Noble said the delays stemmed from high demand, not any production snafus.

"For all the pre-orders, we have a commitment to customers to fulfill those orders on a first-come, first-served basis so we decided to hold off providing inventory to the stores until after the holidays," spokeswoman Mary Ellen Keating said.

Keating declined to say how many pre-orders the company had received for the Nook or how many have been delivered.

Amazon said in November that the Kindle posted its best sales yet that month. [ID:nN30443015]

Barnes & Noble shares fell 62 cents, or 2.9 percent, to $20.99 early Monday afternoon.

PATIENT TO A POINT

Retail experts have said e-readers -- which allow readers to use light, tablet-like devices onto which digital copies of books, magazines and newspapers can be downloaded -- will be a hot gift item this year.

But patience with the Nook's woes could wear thin.

"You really can't afford many more delays, especially because next year it's going to heat up," McQuivey said, referring to a slew of e-readers expected to be introduced at next month's CES conference in Las Vegas hosted by the Consumer Electronics Association.

Barnes & Noble is not the only one struggling to meet demand. Last month Sony said heavy demand for the Daily Edition meant shipments could not be guaranteed in time for the holidays. Last holiday season, Amazon was dogged with similar supply issues. [ID:nN20232084]

Barnes & Noble, which launched its e-reader in late October, said last month that it had sold out of the Nook because of strong demand. It has been scrambling to get the $259 devices into the hands of customers who ordered them before Nov. 20. The bookseller has said orders placed after that date will not be filled until January.

Barnes & Noble's Keating said the company would only disclose after the holidays how long it will need to work through its order backlog.

Borders Group Inc BGP.N has not yet released its own e-reader but is expected to disclose its plans next month.

(Reporting by Phil Wahba; Editing by John Wallace and Richard Chang)

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