Two months ago, Barnes & Noble shipped its Nook, the most eagerly-anticipated e-book reader since Amazon’s Kindle. I thought it packed a number of nice touches and interesting features but that its software was decidedly rough around the edges, and advised that prospective buyers wait for promised updates before plunking down any money–which they’d have to do anyhow, since B&N was sold out and said it wouldn’t stock Nooks in its stores until it had fulfilled all the initial orders.

This week marks the Nook’s second chance at a first impression. Barnes & Noble started rolling out a software update, 1.2, over the weekend, and says that Nooks will finally arrive at retail in the middle of this week–just in time, it says cheerfully, for Valentine’s Day. I tried the revised software, and it’s a start–the Nook’s interface feels more spritely and less buggy, and some usability issues with the original version have been cleaned up. Icons now make it clearer which books can be lent out virtually for two weeks via B&N’s LendMe feature. (The company says “most” books offer the feature, but only about half of the ones I’ve bought do–notable exceptions include Superfreakonomics and The Four-Hour Work Week.) The Nook now offers some exclusive content and discounts (such as a 10 percent off sale on CDs) when it notices you’re on the Wi-Fi network of one of its stories.

But Nook 1.2 isn’t a radical improvement on Nook 1.0 or 1.1. Turning the E-Ink pages is sometimes adequately snappy, and sometimes remarkably slow. The selection of newspapers (12 choices) and magazines (11) remains skimpy compared to the Kindle’s offerings. And one of the gizmo’s original selling points–the ability to read e-books in their entirety when you’re on a Barnes & Noble store’s Wi-Fi–isn’t yet enabled yet, and the company’s press release about the device’s update and arrival in stores doesn’t even mention it. In short, the Nook is going to continue to feel a tad unfinished until at least version 1.3.

What’s more, a heck of a lot has happened in the two months since the first version shipped. A bevy of new e-readers were announced at last month’s Consumer Electronics Show–most notably the shipping-in-April Plastic Logic Que and the shipping-eventually Skiff. (The Que is both competition for the Nook and a companion product: B&N will be selling it in its stores.) Even more significant, Apple’s iPad has been unveiled and will arrive next month.

It’s not like the iPad renders the Nook and its direct rivals irrelevant overnight. Even the cheapest version costs almost twice as much ($499 vs. $259) and lacks E-Ink’s marathon battery life. And in terms of both features and quantity of content, it looks like the iPad’s iBooks e-reader and e-book store aren’t groundbreaking. (The reader reminds me of iPhone e-reading apps such as Classics, stretched out to fit the iPad’s jumbo screen.)

What the iPad will do is dramatically raise the bar for interface slickness. Any next-generation Kindle and Nook doesn’t have to set out to kill the iPad–in fact, if they do they’ll almost certainly fail. But I do think they need to be a lot more polished, even if they stick with monochrome E-Ink for now. (My bet, however, is that monochrome e-readers will be obsolete within a year at the most, and consumers will be more willing to give up good battery life for color than most manufacturers would have guessed.)

Whatever the fate of this Nook and any successors, Barnes & Noble has a shot at being a leader in e-books. The company has made clear that its strategy is to be everywhere books are, as evidenced by the fact that it’s powering the bookstores of Que and other readers, and offers software for Windows, Mac, iPhone, and BlackBerry with more to come.

The “more to come” will surely include a presence on the iPad, expanding on the current Barnes & Noble e-reader for the iPhone. The iPad’s built-in reader looks basic enough that I think both B&N and Amazon.com have a shot at building a better iPad e-reader than Apple has created. (That’s assuming that Apple doesn’t go out of its way to make it difficult for its competitors, which isn’t a given–even before the Google Voice fiasco, the company was rejecting apps for being insufficiently different from built-in iPhone programs.)

One example of how e-reading could be a lot better: Every major e-reader on every platform remains surprisingly text-centric. Images are an afterthought when they’re there at all, which means that a substantial percentage of the world’s most interesting dead-tree books can’t yet be replicated in electronic form form. The first e-reading software that fixes that is going to have a major competitive advantage for a while.

There’s enough that’s right with the Nook that I’d love to see Barnes & Noble iron out its remaining frustrations and deliver every promised feature. Those that have bought Nooks or plan to do so would presumably agree. But I’d also love to be a fly on the wall at B&N headquarters. I suspect that the company’s mind is already racing past Nook 1.3 to an iPad-influenced Nook 2.0–which may or may not be a hardware device–and beyond…

 
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