By Tom McKinney

Last month both Amazon and Barnes & Noble made headlines in the world of e-books, although for entirely separate reasons. On the 22nd, Amazon announced that their Kindle e-book readers would soon support a lending feature similar to that which Barnes & Noble has had implemented since the launch of their Nook e-book reader. Just like the Nook, Amazon's Kindles will have the ability to "lend" an e-book for up to fourteen days (books that are lent out cannot be read by the lender during the lease) to anyone else also equipped with a Kindle. Many are saying this is the death knell for Barnes & Noble's Nook; there remain very few incentives to convince buyers to choose Barnes & Noble over Amazon - the lending ability the last major one.

However, just three days after Amazon made their announcement, Barnes & Noble announced a new Nook e-book reader, dubbed the Nook Color. And this one's quite a bit different from their original: it has a full color display. The e-ink is gone and has been replaced by the same type of display used with Apple's iPad. I've written previously about full color e-book readers, but this is the first time one of the major, established e-book reader retailers has put out an effort in color.

As recently as late May, Amazon's CEO Jeff Bezos was quoted as saying that color e-ink displays were a long way away from being ready for the public, and that a color Kindle would not be announced any time soon. He may be right in that a "color e-ink" display is not ready for primetime, but smaller companies, and now Barnes & Noble, are banking on customers preferring any kind of color screen - even if it is the same as or similar to your television or computer screens. The main benefits of color are somewhat dependent on personal preference: magazine content now becomes an exclusive of color e-readers and tablets, and for the family, children's books in color are now viable as well. To motivate parents, 12,000 new kids titles are being added to the Nook's selection. Other color e-readers have the ability to play video, so having color can be one component to adding more than just reading to an e-reader experience (a color screen without adequate processing power, for example, would be a dud). The difference in cost between e-ink readers and color readers is still usually over $100, so it has its price. Depending on the success of the new Nook, Amazon may feel compelled to bring out a competitor.

Since Barnes & Noble's announcement of the Nook Color, commentators in the press and on the web have noted that this latest product blurs the line between e-reader and tablet. At $250, the price remains in normal e-reader territory and is a full 50% cheaper than Apple's baseline iPad. Compared to Hewlett Packard's recently released Slate 500 tablet (which I admit is geared towards a completely different purpose, as similar as the products look) we're looking at $250 vs. $799. So what's different about the Nook Color and its more expensive tablet cousins?