Should Apple Brace Itself for a Nook Invasion?

You wouldn't think that Barnes & Noble

, one of the most embattled retailers in the nation, could ever pose a threat to Apple

. But after

, B&N announced that its

had sold and/or given away

. Compared to Apple's App Store, which has sold over 10 billion apps, this might not sound too impressive. But unlike B&N, which can only sell apps to a

Nook Color owners, Apple is able to sell apps to more than 120 million iPhone, iPad, iPod Touch and Mac computer users. With that in mind, B&N's app store has been very successful.

B&N has been very clever in its attempt to usurp the competition. Instead of promoting it as the ultimate low-cost iPad competitor, the Nook Color has been hyped as a cool e-reader that can access the Internet. At $250, it retails for half the cost of the lowest-grade iPad. By convincing readers (not technology enthusiasts) to buy the Nook, B&N is in a terrific position right now. With very little effort, the company is free to rebrand and remarket the device without getting dumped into the

.

For all intents and purposes, the Nook Color is a direct competitor to the Kindle, not the iPad. But while Amazon's

e-reader speaks to a very specific market (those who want to read; nothing more, nothing less), the Nook Color is slowly becoming a direct threat to the iPad.

Right now, the biggest difference between the Nook Color and other tablets is the price. Here are a few ways B&N can change that.

Considering the popularity of apps across

digital device, B&N could help the Nook Color stand out by working with developers to create exclusive apps. Angry Birds may be popular, but it's available for nearly every platform on the market. The Nook Color needs apps that cannot be found anywhere else.

Consumers who want streaming video are going to get an iPad 2. Between Hulu, Netflix

, and the ABC app, Apple has this market covered. To compete, B&N needs to go after other services. Whether it's music, video game streaming (like OnLive or

), or something else entirely, B&N needs to offer consumers

that they cannot get anywhere else.

Though it may not fit into B&N's current business model, the retailer should consider joining forces with a PC manufacturer before designing the next Nook. Obviously this could not occur if such a deal would raise the cost of the device. To continue competing, the Nook Color must stay under $300. But if there is way to make it happen without adding to the expense, B&N could really benefit from a PC partner.

This one is extreme and not at all likely to happen. But what a great way to gimmick parents into buying the Nook over other e-readers – once kids see the potential for 3D storybooks, they wouldn't want Mom or Dad to buy any other device.

For the time being, B&N is not capable of competing against the iPad. But in a world where

, the Nook is huge. Still, B&N should not get cocky. This is Apple's domain, and it will stay that way for at least the next 12 months. Even if the stars aligned and B&N took over the e-reader market, the Nook would still be faced with a tablet competitor that has sold well over 20 million units worldwide.