During my store visits a couple of weeks ago, I came across a new highlighted product category that is available in most stores—yes, you guessed it right – eReaders.  eReaders are one of the hottest product categories this holiday season and promotional displays are currently seen at most consumer electronics and mass merchant stores.

One common theme across the channel is that Sony is heavily investing in eReaders as a future growth category.  The eReader display is the first thing that you notice when you are in Staples and the most prominent stand in Best Buy’s mobile device section.  Sony has placed so many eReader displays in retail that it is easier to count the chains that do not promote the technology.  Displays for Sony’s eBook reading devices feature informational videos and comparison charts highlighting the key differences between competing eReaders.

Following Amazon’s private label lead, Barnes & Noble also made a foray into the market with the ‘nook’.  The retailer has created a separate section in the middle of its stores managed by a dedicated in-store representative to educate people about the ‘nook’, provide a demo, answer any questions, and pre-order the device.  Yes, it is still only available for pre-order!!!  Let’s hope for Barnes & Noble’s sake that it gets the ‘nook’ out before President’s Day!

Sony and Amazon currently dominate the eReader market largely due to brand recognition as well as the availability of these products.  Out of the ten stores selling eReaders in gap intelligence’s retail panel, Sony is available at eight and enjoys a competition-free presence at seven of them.  Although the Kindle is limited to Amazon.com, given the ubiquitous reach of the internet and lack of holiday lines, customers would have no trouble ordering a Kindle.  Unfortunately for Barnes & Noble, pre-order sales of the ‘nook’ exceeded current production levels and the device has yet to be made available for an immediate purchase.  Barnes & Noble continues to change its shipping and in-store availability date (the last time I checked it was Feb 1st, phew!!).

Vendors are positioning eReaders not only as a useful device for college students or business professionals, but also as ideal holiday gift items.  eReaders can prove to be exceptionally useful small devices to anyone who is an avid reader, has run out of space to store more books, or is tech savvy.

The eReader market is expected to go though a sea change in 2010 with a significant increase in the number of brands and product availability (both online and retail).  The category will also see aggressive price competition and possibly adaptations to its sales model and echo system.  Stay tuned for more on eReaders!