Google is now selling its iRiver Story HD eBook reader exclusively at Target in the U.S.. We speculated here back in January that a Google branded eBook reader may be in the works and now that that shoe has dropped, what does this mean to the larger tablet vs eReader battle that is shaping up in the marketplace?

Well first of all, it may mean that Barnes & Noble, makers of the Nook eBook reader are none too happy to have Google as yet another competitor in its pitched battle with the Amazon’s Kindle. Indeed, I wonder if this is why Barnes & Noble is no longer an advertiser on Google’s Affiliate Network. They’ve moved to Linkshare, which I should note means I have to update the Nook ads on this web site!

Google iRiver Story HD eReaderThe reader itself has so far garnered only mixed reviews. The design is clearly inspired by the Kindle, and in a market that is moving to touchscreen eReaders as witnessed by the recent Nook and Kobo offerings, seems a little dated. But as I previously argued, I don’t think Google is trying to capture the eReader market and their survival, unlike Barnes & Noble, doesn’t depend on that. Like the Nexus smartphones, the iRiver Story HD is probably a hardware reference platform intended to encourage other players to enter the market.

If Google follows form, they’ll probably freely or cheaply license the underlying iRiver Story tech to 3rd parties who want to jump into the eReader market. It seems pretty clear by now that Google wants to be a part of any device that can access the net and consume digital product. Amazon is already giving readers a big price break on Kindles if they are willing to have ads display on the device’s screen saver. It wouldn’t be a surprise to see this on the Google eReader at some point in the future. If 3rd parties in Google’s eReader ecosystem follow suit, then Google wins big time, much as they are with the proliferation of Android based tablets and smartphones.

In the end, I doubt Amazon or Barnes & Noble have much to fear from Google itself. However the legions of eReader competitors Google may give rise to are another matter entirely.