Four Reasons Barnes & Noble Could Threaten Apple's Dominance

The company is growing. Should Apple or Amazon be worried?

Barnes & Noble

announced this week that its Nook business soared 85%, reaching

. While critics will quickly note that this number pales in comparison to the billions of dollars Apple

has made selling iPads, Barnes & Noble is still a newcomer in this field. Whereas Apple had the benefit of entering the tablet market (and technically the e-reader market)

building up its customer base with several iPod and iPhone iterations, Barnes & Noble has had to play catch-up in both tablet and e-reader sales. That makes the Nook all the more impressive. But is this enough of a reason for Apple to be concerned? Should Amazon

, the leader in e-reader sales, start to quiver? Not yet. But that doesn't mean the two tech giants should get cocky. There are many reasons why Barnes & Noble could pose a threat to both Apple and Amazon in the not-too-distant future.

Right now, most tech companies underestimate the potential of Barnes & Noble. They see the company as a retailer of products designed and manufactured by someone else. Amazon was once in the same position. Now I don't mean to imply that Barnes & Noble can emulate every Amazon success story – far from it. But it's the companies people underestimate that have the potential to make the greatest impact. Apple knows this better than anyone. Before the iPod (the original iPod), who would have guessed that we would one day fill our homes with Apple products?

Taking a cue from Apple's product strategy, Barnes & Noble is slowly releasing new and expanded products within its Nook lineup. With the arrival of the company's first tablet, you might think that there was no point in releasing the Nook Color. But that tablet was a crucial bridge between the Nook e-reader and the new Nook Tablet. What will Barnes & Noble release next? All things likely, another version of its e-reader. In the next year or so, expect to see a vastly improved version of the Nook Tablet. Beyond that, I wouldn't expect Barnes & Noble to release a smartphone. But if Amazon

, anything is possible. Just don't expect a Nook TV set anytime soon.

Make no mistake: Apple makes the best tablet available. But it's a pricey beast. At $500 for the base Wi-Fi model, Apple easily trounced

in the same price range. But when Hewlett-Packard

dropped the price of the TouchPad to $99,

. Apple may have had the better product, but with a $400 difference in price, consumers were eager to get their hands on an alternative. This was the strategy that Amazon used when selling the Kindle Fire, but it

, leaving consumers with a void for viable iPad alternatives. Barnes & Noble aims to fill that void with a tablet that costs $50 more than the Kindle Fire but still retails for half the price of the iPad.

While it is unlikely that Barnes & Noble will steal any current iPad users, the Nook Tablet is in a very good launch position. It comes to the market with a very strong brand. Next to the Kindle, the Nook is the most popular (and most well-known) e-reader. That level of brand recognition can go a long way in helping a company succeed, especially in the long-term.

Investors who are intrigued by the Nook Tablet should consider the following:

Not liking the Nook Tablet? Are you down on Barnes & Noble, or would simply prefer something else? If so, peruse these alternatives: