IN March 2009, an eternity ago in Silicon Valley, a small team of engineers here was in a big hurry to rethink the future of books. Not the paper-and-ink books that have been around since the days of Gutenberg, the ones that the doomsayers proclaim — with glee or dread — will go the way of vinyl records.
No, the engineers were instead fixated on the forces that are upending the way books are published, sold, bought and read: e-books and e-readers. Working in secret, behind an unmarked door in a former bread bakery, they rushed to build a device that might capture the imagination of readers and maybe even save the book industry.
They had six months to do it.
Running this sprint was, of all companies, Barnes & Noble, the giant that helped put so many independent booksellers out of business and that now finds itself locked in the fight of its life. What its engineers dreamed up was the Nook, a relative e-reader latecomer that has nonetheless become the great e-hope of Barnes & Noble and, in fact, of many in the book business.
Several iterations later, the Nook and, by extension, Barnes & Noble, at times seem the only things standing between traditional book publishers and oblivion.
Inside the great publishing houses — grand names like Macmillan, Penguin and Random House — there is a sense of unease about the long-term fate of Barnes & Noble, the last major bookstore chain standing. First, the megastores squeezed out the small players. (Think of Tom Hanks’s Fox & Sons Books to Meg Ryan’s Shop Around the Corner in the 1998 comedy, “You’ve Got Mail”.) Then the chains themselves were gobbled up or driven under, as consumers turned to the Web. B. Dalton Bookseller and Crown Books are long gone. Borders collapsed last year.
No one expects Barnes & Noble to disappear overnight. The worry is that it might slowly wither as more readers embrace e-books. What if all those store shelves vanished, and Barnes & Noble became little more than a cafe and a digital connection point? Such fears came to the fore in early January, when the company projected that it would lose even more money this year than Wall Street had expected. Its share price promptly tumbled 17 percent that day.
Lurking behind all of this is, the dominant force in books online and the company that sets teeth on edge in publishing. From their perches in Midtown Manhattan, many publishing executives, editors and publicists view Amazon as the enemy — an adversary that, if unchecked, could threaten their industry and their livelihoods.
Full story at the New York Times.

While over at PublishersLunch they have this to say:

Towards the end of the NYT business section article that follows the standard narrative, they note that in BN's 300-person Palo Alto division, "engineers were putting final touches on their fifth e-reading device, a product that executives said would be released sometime this spring." The story also says that ceo William Lynch "plans to experiment with slightly smaller stores."
Meanwhile, Amazon offers another nebulous growth statistic to the paper. For the nine-week holiday sales period, ending December 31, "Kindle unit sales, including both the Kindle Fire and e-reader devices, increased 177 percent over the same period last year." (Amazon will report earnings for the quarter on Tuesday afternoon.)
Separately, though Bloomberg doesn't exactly nail the details, it appears that Barnes & Noble's deal with Waterstones to bring the Nook to the UK has become less of a secret, though the launch is still a ways off.

And at Book2Book:

B&N to ink first overseas Nook deal with Waterstones?

Barnes & Noble is developing a partnership with U.K.'s Waterstones Booksellers Ltd. to sell the digital tablet in its 300 locations this year. Analysts are skeptical of the success.
Mary Ellen Keating, a spokeswoman for Barnes & Noble, and Fiona Allen, a spokeswoman for Waterstones, declined to comment.