CHAPTER SEVEN: Borders goes E!

Borders Group (BGP) launched an electronic bookstore Wednesday, entering a market dominated by Amazon (AMZN), Apple (AAPL) and Barnes & Noble (BKS). But the No. 2 U.S. bookstore chain by sales is optimistic about its chances, believing it will quickly catch up with rivals and win a piece of the fast-growing e-books sector, Reuters reports.

Along with its e-bookstore, Barnes & Noble launched the Nook e-reader nine months ago. Amazon sells the popular Kindle e-reader and Apple markets the iPhone and iPad, which debuted three months ago. Borders is clearly behind -- at least for now.

With sales at its bookstores and website down over 11% in the first quarter, Borders needs a piece of the growing e-book segment. Some analysts believe this category could grow from 3% of total book sales in the U.S. to nearly 13% by 2015.

An Uphill Battle

Armed with data on 38 million customers, Borders believes it will easily capture market share. Borders' goal is to secure a 17% share of the e-book market by July 2011. But with Barnes & Noble already claiming to have won 20% of the U.S. e-book market, it could be an uphill battle for Borders.

Borders' e-bookstore will offer 1.5 million titles, including free books. Amazon says it offers 620,000 books, as well as 1.8 million free, out-of-copyright titles. Barnes & Noble claims it offers 1 million titles.

Borders had previously introduced the Kobo eReader for $149 and the Aluratek Libre eReader for $119 on Borders.com. Both devices have surpassed sales expectations, Borders says, as they are priced to fit most budgets.

Borders also has apps for Apple's iPhone and iPad, and on Wednesday it introduced apps for Research In Motion's (RIMM) BlackBerry and for phones that run Google's (GOOG) Android software.

With more business moving online, Borders will likely have to close some brick-and-mortar stores at some point.

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