Barnes & Noble had the opportunity to make a RIDICULOUSLY huge impact this holiday season by launching their own branded E-Reader to compete with the Amazon Kindle and lesser known Sony Reader products. Instead, the New York Times reports that iRex Technologies will make a splash of their own by selling the iRex DR800SG in BestBuy stores this holiday season. The device has an 8.1-inch touchscreen and connects to Verizon Wireless’ network to download books from Barnes & Noble and periodicals from Newspapers Direct.

At $399 the iRex could be a huge hit – the Sony Reader brand has failed to pick up steam despite the fact that the Kindle is only available through Amazon.com. But BestBuy is in the process of training thousands of employees to man dedicated E-Reader sections of their retail stores to push sales of the new device. Since potential E-Reader buyers aren’t able to “test” or “try” Amazon Kindle E-Reader in-store, the iRex may lure folks who are on the fence. But the price won’t lure them.

A Forrester Research study shows that most consumers are only likely to purchase an E-Reader at the cost of $100 to $150. This price would be attainable if the carrier would subsidize the cost of the hardware but Verizon says they will not do this with the iRex. The Kindle utilizes Sprint and the Sony Reader utilizes AT&T, neither of which subsidize the products.

Approximately 1 million E-Readers were sold last year and studies show about 5 million could sell in 2010. However, as Netbooks and other devices become more affordable, the proposition to purchase a device solely for reading books comes seriously into question. Why not just purchase a full MID or Tablet subsidized by carrier? Eventually these two product lines may collide, but at least for THIS holiday season, iRex has an open field.

By the way, CrunchGear has a great chart that compares the Kindle, Kindle DX, Sony Reader Daily Edition and iRex DR800SG in depth: