The Nook is comparable in size and shape to the Kindle 2, as well, and uses an electronic paper display from the same company that Amazon uses (E Ink). Unlike the Kindle, however, the Nook is the first reader to use the Android operating system from Google (NASDAQ: GOOG), and it provides access to the store's 1 million e-book titles, including 500,000 through Google's Booksearch program. With 2 GB of memory, users can store up to 1,700 books on the device. To fill this capacity, they'll be able to scroll through book covers in color at the bottom of the screen.

For Barnes & Noble, the route of attack appears to be openness. The Nook, it says, will allow people to lend books to each other for up to 14 days, and Nook users will be able to browse entire electronic books while in the retail stores without actually buying them ... as they can with the paper counterparts on the shelves. The company is seeking to fuse the retail experience with emerging technology, a route that Amazon is incapable of replicating.

I have to admit, I was skeptical about Barnes & Noble's entry into the e-reader market, figuring that its best result would be some sort of Kindle knockoff. While it's still too soon to tell if the retailer will put up any real competition, all signs indicate that it will at least make a dent in Amazon's market share -- and give the company a way to avoid the fate of music and DVD retailers.