Barnes & Noble (BKS) held a slick press event earlier this week to announce its new Nook digital reader. William Lynch, president of online business, was justifiably pleased as he stood cradling the cute arrival. But even though the Nook offers improvements that trounce the Kindle, it is hard not to see the device as a doomsday machine that could destroy B&N’s beleaguered business.

Here’s the problem: Barnes & Noble sells books, but it’s not in the same business as Amazon. The Kindle improves Amazon’s (AMZN) business in every way. The Nook will put pressure on a structural weakness in B&N’s business plan, toppling a flailing operation. 

The Big A is an Internet retailer. The Kindle builds on the firm’s strong brand loyalty and refines the bookselling process that its customers already find appealing. (In this week’s earnings announcement, Amazon named Kindle its top product across the site in both unit and dollar sales.) As sales shift to the Kindle, the infrastructure of Amazon’s business, like servers and warehouses, can be diverted toward other items, like electronics and cloud-computing services. Barnes & Noble does something very different. It owns physical stores that it must stock and restock, man with employees, and send people to.

Amazon’s success with the Kindle is a virtuous cycle of cost reduction. As it converts customers from visiting the Web site to buy a book (and then waiting for the mail) to picking up the Kindle for both functions, Amazon gains margin at every turn.

At B&N, there’s a different story. In the center is BN.com, the lackluster e-commerce site. In the world of online bookselling, BN.com is an afterthought, a product of pride more than a return on investment. Lacking brand loyalty and meaningful market share, BN.com doesn’t have the critical mass to launch the Nook well. To be fair, Lynch recognizes this without having to admit to it. At the press conference, he emphasized two features of the Nook that would compensate for the company’s online weakness, by leveraging the firm’s strength in physical stores.

Although the Nook won’t land until the end of November, Lynch showed off large in-store displays that the company will use to push the new device. B&N figures that with 700-plus superstores and more than 600 college stores manned by “40,000 passionate booksellers,” they’ll have plenty of evangelists to play catch-up to the Kindle.