Barnes & Noble eReader, the Nook

If you're the type of early Christmas shopper who bought a Kindle last week, I hope you kept the receipt, because a newer, equally affordable option is about to hit shelves.

Barnes & Noble (BKS) CEO Steve Riggio on Tuesday took the stage before hundreds of authors, agents, publishers and pundits to debut the company's electronic reader, the Nook.

The Nook will sell for just $259, a steep discount from competitors like the Sony (SNE) Reader and the iRex DR800SG , which both retail for $399. The price suggests Barnes & Noble is going straight for Amazon (AMZN), which recently lowered the Kindle's price to $259.

The Nook uses the same screen technology that powers Amazon's Kindle, but adds an iPhone-like color touchscreen below for easy navigation. Readers have access to 3G wireless on AT&T's broadband network.  The reader holds up to 1,500 books (like its major competitor), but an expandable memory slot allows readers to add up to 17,500 more. "You're getting a lot of eReader for the money," says Sarah Rotman Epps, an analyst with Forrester Research.

Another novel experiment: lending. Barnes & Noble lets readers share titles with friends on any platform in the Barnes & Noble ecosystem. So you like the "Tipping Point?" Buy it for your Nook and lend it to your sister to read on her Barnes & Noble iPhone application. (She'd better not procrastinate; she has 14 days before it disappears.)

Barnes & Noble will turn its massive retail presence into a competitive advantage. Over the next few weeks, the bookstore chain will roll out Nook displays in its 700 stores and 600 college bookstores. Through complimentary Wi-Fi connections in all the stores, readers will be able to browse eBooks on their readers just as they might have always browsed the shelves.

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Tyrese Gibson's Mayhem is a comic book – the first standalone print publication for sale in Apple's iTunes LP format.

Tyrese Gibson’s Mayhem is the first digital book for sale on iTunes 9 – perhaps an early sign of Apple’s (AAPL) desire to take on Amazon’s (AMZN) Kindle and Sony’s (SNE) Reader in the digital book market.

I would have missed the significance of Mayhem on iTunes if I hadn’t run into Gibson himself on Wednesday. After the Steve Jobs iPod keynote, I spotted the actor/singer known for roles in action movies like Transformers 2 in the demo area where attendees were playing with the new iPods and software. He had a laptop open and was doing a few TV interviews about his Mayhem project, and its debut on iTunes.

Gibson isn’t the first person you’d expect to make a mark in the comic book business. For one, he’s not a longtime comic book fan – he only recently got interested in the medium while attending the Comic-Con convention to promote the movie Death Race. After seeing the devotion of die-hard fans there, he was determined to get in on the action – and he conceived of Mayhem, a vigilante tale with a diverse cast of characters. More

Sony Reader

In what is fast shaping up to be a war in the e-reader marketplace, Sony (SNE) has launched the latest salvo, a sub-$300 touch-screen "Reader Touch Edition" and the $199 "Reader Pocket Edition," which features a 5-inch display. The company is also lowering prices of ebooks. New releases and best-sellers will all be $9.99, matching Amazon’s (AMZN) price point for the first time.

In addition to lowering prices, adding a touch-screen and trimming form factor, Sony is also attempting to differentiate itself by opening the ebook market place. It offers free access to the 1 million public-domain books digitized through the Google Books Project, and ebooks purchased at Sony’s store, which use the standard EPUB format, can be shared on any combination of six PCs and e-reader devices. Owners of the Sony devices can download ebooks in the library for 21 days.

It’s ironic that Sony would play open-standards champion, given its rich history of proprietary technologies (Betamax, Memory Stick, etc.), but Steve Haber, president of Sony’s Digital Reading Division, says the company is committed to openness as a way to hasten the move from paper to digital.

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The departure of outsized NBC chief Ben Silverman is the third time that the producer will team up with IAC’s Diller.

By Richard Siklos, Editor at large

Silverman, shown at Fortune Brainstorm Tech, days before leaving NBC. Photo: Robin Twomey

Ben Silverman’s  departure from NBC this morning comes as no huge surprise: he was an out-of-the-box choice to head programming at major broadcast network and his two-year-plus tenure was marked by lots of attention on Silverman’s outsized persona but little yet in terms of new prime time hits for the long-struggling Peacock Network. (For more on Silverman see our story, The Player.)

It also makes perfect sense that Silverman’s exit  involves the creation of a new and as yet unnamed production company in partnership with IAC Interactive Corp., (IACI) the Internet company led by mogul Barry Diller. This will actually be the third time that Silverman and Diller have teamed up to produce ventures aimed at melding conventional TV advertising, programming and Web—and both other times yielded the men handsome returns.

“Barry stirs the pot and he sees the future,” Silverman said in an interview today.  More

With the launch of the Flip video camera in May 2007, the camcorder market has never been the same. Flip brought video creation and sharing to the masses, which meant even more footage of cats riding skateboards. (We can't thank them enough for that.)

Consumers embraced the convenience, simplicity, portability, and affordability of Flip's "point and shoot" video camera. It has few buttons, records video on an internal chip, and uploads footage to a computer through a USB key that "flips" out of the camera. Software loaded on the device transfers clips seamlessly to the Web. Models start at $150.

Soon the device was grabbing market share from Sony (SNE) and JVC — more than two million of the cameras have been sold — and earlier this year networking giant Cisco (CSCO) snapped up Flip maker Pure Digital for $590 million.

But there's a new rival on the scene: Apple iPhone 3GS, introduced in early June, boasts a video capture function. And some technophiles are asking if Flip's days as the No. 1 pocket video recorder are numbered. More

SanDisk's Sansa media players are number two in the market, behind the iPod. Image: SanDisk

SanDisk CEO Eli Harari once plotted to dethrone the iPod with a series of "iDon't" ads ­ a marketing campaign that cast Apple iPod users as fad-driven sheep, and promoted his company's Sansa media players as the smart alternative. Some fads, however, don't pass. And in his sunny Silicon Valley conference room one recent morning, the founder and CEO of SanDisk admits what many music lovers have known for a long time: the iPod wars are over, and Apple (AAPL, Fortune 500) won.

"You can't out-iPod the iPod," Harari now admits.

Even so, one could argue that SanDisk (SNDK) won something too. Its Sansa (which remains a distant No. 2 to the iPod) helped prove that SanDisk's core product, flash memory, is the best storage technology for mobile gadgets such as the Sansa and iPod. This in turn sparked demand for SanDisk's patents, bringing the company a healthy stream of licensing and royalty revenue. (AAPL) (MSFT) (INTC) (SNE)

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On Christmas Eve, at the height of a holiday season that Steve Jobs claimed was the first in a decade he got to spend with his family, Apple's (AAPL) ailing CEO was on the phone screaming at the chairman of Sony Music (SNE).

That's the picture Tim Arango paints in Monday's New York Times in an article that describes the "tense and antagonistic" relations behind the seemingly harmonious music pricing agreement unveiled at Macworld less than two weeks later.

On Jan. 6, Apple announced that the major record labels had agreed to drop their demands for copy protection in return for the right to charge more than 99 cents for new and popular songs on Apple's iTunes store.

But according to Arango, the negotiations were anything but cordial.

"Disagreements over the timing of the changes … resulted in a particularly tense conversation on Christmas Eve between Steven P. Jobs, the chairman and chief executive of Apple, and Rolf Schmidt-Holtz, the chairman of Sony Music. …

"According to a person briefed on the telephone call, Mr. Schmidt-Holtz and Mr. Jobs had a heated exchange by phone on Christmas Eve. Eventually, Sony gave in and agreed to a longer waiting period …

"A spokesman for Apple declined to comment, as did a representative for Sony Music. But chatter about Mr. Jobs’s combative tone on the call ricocheted around the music industry, and it was regarded as another display of his tough bargaining tactics, made possible by Apple’s position as the dominant seller of music …

'I think Steve has been smart, and he knows he has the upper hand,' said Dave Goldberg, the former general manager of Yahoo Music." (link)

Although Jobs has since taken a leave of absence to deal with medical problems, the music industry does not expect Apple's bargaining manners to become any more pleasant.

"The entire Apple staff,"  writes Arango, "including Eddie Cue, the vice president in charge of iTunes who handles the relationships with the record labels, do their best to follow Mr. Jobs’s style in their own negotiating." (link)

See also:

• The cost of removing Apple's copy protection
• What's going on with Steve Jobs' hormones?
• Why does Steve Jobs look so thin?

If a picture is worth a thousand words, here's five grand worth of Apple (AAPL) news in charts and lists released over the past couple of days.

1. Web Brands. Apple scored No. 10 in Nielson Online's ranking of the top Web brands based on the number of unique visitors each site drew in December 2008 — which isn't bad considering Apple.com's focus is so much narrower than the brands it's up against, like Google (GOOG), Yahoo (YHOO) and Amazon (AMZN). (link)

2. Social Brands. The iPhone scored No. 1 — ahead even of its parent company at No. 3 — in the Vitrue 100, a new ranking launched this week by an Atlanta-based marketing company with a deliberately misspelled name. Vitrue's list ranks blue chip brands by how often they get mentioned in blogs, photo-sharing sites and such social media entities as Facebook, MySpace and Twitter — presumably a measure of how large these names loom in the minds of an emerging category of early adopters.

3. Days to 1 Million. This comes from an Engadget reader named Noel F. who used published sales data to compare the rate at which the leading smartphones achieved the market penetration milestone of 1 million units. However, as Engadget's Tom Ricker notes, this leaves out the important factor of geographical footprint at launch. The Google Android G1, for example, launched only in the United States. The iPhone 3G was released simultaneously in 21 countries. (link)

4. Volume vs. Revenue. CounterNotions's Kontra uses data from GigaOm's Jose Fermoso to demonstrate that what matters is not how many smartphones you sell, but how much you make on each sale. Unfortunately, both writers' comparisons are a bit off since Apple's Q1 numbers include revenue and earnings not just from iPhones, but also from Macs, iPods and other goodies.

5. Stock Price. Finally, a glance at Apple's share price, which having suffered a thousand cuts in the past year finally picked up a little traction in the past two weeks.

How does Apple plan to sell large quantities of iPods this holiday season in a depressed market already saturated with MP3 players?

By repositioning them as high-end game machines.

That's the message coming through loud and clear from Cupertino, not only in those ubiquitous TV ads proclaiming the iPod touch "the funnest iPod ever," but in a series of public pronouncements from executives usually content to let Apple's products speak for themselves.

Apple marketing guru Greg Joswiak last month called the touch "the future of gameplay" (link). Tech evangelist John Geleynse on Friday proclaimed it a "game console" in the same league as Sony's and Nintendo's (link).

Even CEO Steve Jobs entered the fray, telling the Wall Street Journal last month that the iPhone and the iPod touch "may emerge as really viable devices in the mobile games market this holiday season" (link).

It's an interesting switch in marketing strategy, made just before what should have been — in normal economic times — the biggest selling season for both digital audio players and hand-held game machines. Now it's a scramble on both fronts, and the players are a little desperate. Even, maybe, Apple.

When it first came out, Apple billed the iPod touch as an iPhone without the phone — a portable media player and a mobile Wi-Fi Internet device without the monthly bill from AT&T.  But it also came without AT&T's (T) subsidy, which pushed the touch's average retail price into the mid $300s and kept its quarterly sales — after an initial burst last December — in the 2.0 to 2.3 million range.

With a price cut in September and, equally important, a wave of thousands of games written for the iPhone yet playable on the iPod touch, Apple sensed a new opportunity.

But going up against Nintendo and Sony while maintaining the fat margins to which it has become accustomed required that the company perform a neat trick: it had to flip the usual video console business model on its head.

Nintendo (NTO.F) and Sony (SNE) use the Gillette razor/razor blade strategy: they sell their hardware as cheaply as possible — often at a loss — and make their profit on the games, which typically sell for anywhere from $19.99 to $39.99.

Apple (AAPL) makes nice profits on the hardware and leaves a few crumbs on the table for third party software developers, whose games typically sell for $0.99 to $9.99, if not for $0.00. (See Trouble in the (99-cent) App Store.)

Here's how the three machines — and their top-selling games — stack up:

Analysts are split on whether the strategy will work. Kaufman Bros.'s Shaw Wu is bullish; he believes Apple will sell 21 million iPods this quarter — almost as many as it sold last year. The normally bullish Gene Munster at Piper Jaffray is bearish; he doesn't expect Apple to sell more than 18.6 million units, down 16% from 2007. (See iPod holiday sales: Hot or Cold?)

Hand-held gaming is a brutal business and Apple is not the first company to try to break in. The field is littered with the carcasses of portable game systems marketed, priced down and ultimately abandoned. For a gallery of machines past and present see below the fold. (Source: here.)

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Dell's first "iPod killer," the Dell Digital Jukebox, was discontinued in 2006 …

… while Apple's iPods continue to dominate the MP3 player market with a 70 percent share. Photos: Dell, Jon Fortt

From: Jon Fortt

To: Michael Dell

Subject: Taking down the iPod

Dear Michael,

You might remember our recent chat at Fortune's Brainstorm Tech conference, when you shared with me a theme you've sounded before: "I think the sign of a great company is that it can kind of learn from its mistakes," you said, "and go on to greater heights."

You were talking about Dell's (DELL) PC business, where you've tweaked the direct sales strategy in response to a changing market. But you could just as easily have been referring to your company's tentative plans to release another MP3 player this fall to compete with Apple's (AAPL) iPod. I think if you follow your own observation, you'll delay the product launch. Dell's not ready to make this mistake again. More