Barnes & Noble Inc. unveiled a new electronic-book reader Tuesday that will compete with Amazon.com's Kindle in a still-small arena where some see bookselling's future.

Closer to a printed book than its precursors in some respects, the Barnes & Noble nook allows users to lend their copies of electronic books to any friend who has installed the company's e-reader application on a mobile device or personal computer.

But the wireless nook, which runs on Google Inc.'s Android platform and comes with 2 gigabytes of memory built in, also can store and play MP3 audio files and photos.

The reader is available on Barnes & Noble's Web site for $259 — same as the recently reduced Kindle — and is to start shipping in November.

Author Malcolm Gladwell read from his best-seller "The Tipping Point" during a launch event Tuesday for the device in New York. The first 10,000 people to order a nook will get a free electronic copy of Gladwell's book.

The device comes with free wireless access in Barnes & Noble stores, where it will be displayed for sale.

Other features include a slot for adding up to 16 gigabytes more memory and a 3.5-inch color touch screen below the page display. Less than 5 inches wide and 8 inches tall and weighing 11.2 ounces, the nook is the size and weight of a paperback book, Barnes & Noble says.

Some e-book readers, including the Kindle, display only versions of books provided by the company that sells the device. But the nook, like Sony Corp.'s e-readers, can display texts in PDF and epub formats, meaning users aren't limited to buying books from Barnes & Noble directly. Epub is an open standard supported by the International Digital Publishing Forum that numerous publishers use to make e-books.

The largest U.S. book store chain is only the latest company to enter the e-reader market, which Kindle has dominated since its 2007 launch. Sony has sold e-readers since 2006 and plans to launch a new version with a touch screen and wireless downloading capability via AT&T in December. Smaller companies IREX Technologies Inc. and Plastic Logic Ltd. also plan to offer e-readers soon.

So far, e-readership is small.

"Only 8 percent of the U.S. adult population bought one e-book in 2008," and most read them on PCs, said Michael Norris, senior analyst at research firm Simba Information. "So it's a device that is extremely important to everyone except 92 percent of American adults."

Still, it's a fast-growing niche in an industry that is slumping. Forrester Research predicts 3 million e-readers will sell in the U.S. in 2009, and twice that many in 2010.

Sales have been falling for years at Barnes & Noble and other brick-and-mortar booksellers as shoppers turn to online and discount booksellers. The recession also led consumers to slash their spending on discretionary items like books and music.

Barnes & Noble hopes the e-reader and the company's new e-bookstore, launched in July, will boost sales. The e-bookstore, which sells versions of books to read on smart phones and other mobile devices and most personal computers using the company's e-book application, offers more than 1 million books, magazines and newspapers, including some titles offered free by Google.

Amazon.com offers about 350,000 e-books, and Sony offers about 100,000. Google offers free electronic versions of about 1 million titles that are in the public domain.

Barnes & Noble also powers the e-bookstore used by Plastic Logic's upcoming Que reader.

In marketing the nook, Barnes & Noble has the advantage that it can feature its e-reader in its stores, said Norris.

"If you buy something from Amazon, you can't touch it first," he said.