Business and Finance

The dominance enjoyed by Amazon.com Inc’s Kindle faces its first major test this holiday season, but industry experts say only a real technological leap will pose a threat.

Barnes & Noble Inc is expected to unveil its own branded electronic book reader on Tuesday with a hybrid model that incorporates a reading screen similar to the Kindle’s white and gray display, with a second touch-screen display that makes browsing easier.

The bookseller’s main advantage could be in its physical stores where users will be able to test out the device. A disadvantage may be its as-yet unknown price, which some say will be higher than the Kindle’s recently lowered $259.

Barnes & Noble has not confirmed its e-reader plans.

But the market — arguably built by Amazon — is getting crowded, with e-readers in the pipeline from a spin-off of Royal Philips Electronics called iRex Technologies, Taiwan’s Asustek, Plastic Logic and a Hearst-backed venture called FirstPaper. They would share the space with Interead’s “Cool-er,” the Cybook OPUS from Bookeen and others.

“It takes one person to prove this is a very viable business model and as soon as that is proven you have a lot of people … who jump in,” said Mukul Krishna, global director for digital media at consultancy Frost & Sullivan, adding that the best time to enter the market is ahead of the holidays.

“Amazon has done exactly that with the Kindle. They’ve caught everyone’s imagination,” Krishna said.

E-reader hype has hit a peak in the past month, as Amazon rolled out the Kindle internationally and the world’s biggest Web players and publishers began to mobilize.

Google Inc unveiled plans for an online e-book store, while News Corp’s Rupert Murdoch visited Japan and South Korea to size up e-reader technology. But Amazon is expected to retain its first-mover advantage.

“Amazon really controls the digital shelves right now,” said Mark Coker, founder of e-book publisher Smashwords. He cited the Kindle’s locked-in customers, who must buy e-books exclusively from Amazon that can then only be read on their Kindles or on Apple Inc’s iPhone or iPod Touch.

“I think everyone realizes Amazon got it completely right. They are way ahead of the curve,” he said.

Some 3 million e-readers are expected to be sold in the United States this year, with sales doubling in 2010, according to Forrester Research.

Amazon does not provide data on Kindle sales, but investors will be eager to learn of its progress when the online retailer releases results on Thursday.

DIGITALLY SHARING

Analysts say the larger — but not unsurmountable — threat to Amazon could come from demand for an open system in which e-books bought from various sources can be shared on multiple devices. 

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