Report: Analysts warn shifts to e-reader could hurt booksellers

New York City The shift from digital to physical books will ultimately hurt traditional brick-and-mortar booksellers, analysts said Friday on the heels of Barnes & Noble launching its new e-reader.

Barnes & Noble introduced the Nook on Tuesday as a competitor to online retailer Amazon.com's Kindle, which has dominated the e-reader market. The bookseller could become a major player in the digital book business, which could actually speed the downward trend in its revenue and profit, said Credit Suisse analyst Gary Balte, in an Associated Press report.

“As the math currently works, each sale through a Nook is not just unprofitable but potentially replaces a higher-margin sale at stores,” Balter wrote in a client note Friday.

One obvious risk is that downloading books reduces the need to go into stores, Balter said.

Goldman Sachs analyst Matthew Fassler wrote to clients Friday that the move to digital formats “clearly challenges Barnes & Noble's store-based model.”

E-book readership is small, but growing fast. Forrester Research predicts 3 million e-readers will sell in the United States in 2009, and twice that many in 2010.

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