The e-reader price war is officially on

Amazon cuts the price of the Kindle as competition mounts on the low and high ends of the e-reader market.

By Kim Peterson Jun 21, 2010 3:27PM

Credit: AP
Caption: Amazon KindleThe e-book industry was shaken up Monday as Amazon(AMZN) and Barnes & Noble (BKS) made aggressive cuts to the prices of their book-reading devices.

First, Barnes & Noble cut its Nook reader to $199 from $259. That reader comes with 3G technology. The company also introduced a Nook that connects only through Wi-Fi for $149.

A few hours later, Amazon followed by dropping the Kindle to $189 from $259. Other e-readers, such as one by Sony (SNE), are sure to follow.

Before the Kindle price cut, Amazon was facing intense competition on the low and high ends of the pricing spectrum. The Nook already beat the Kindle in one month of this year -- if this report is true -- and the price cut will make the device even more attractive to people who don't want to spend a lot on a book reader.

Then there's the iPad, with a starting price of $500. It can certainly do a lot more than a Kindle, and Apple created a nice program for reading digital books (in color, to boot).


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Apple says the iPad now gets 22% of all e-book sales from big publishers. The New York Times points out that the figure is skewed because it reflects only the big publishers and not the entire publishing industry.

Still, that momentum must have Amazon executives worried. The only moves available to Amazon were to cut the price of the Kindle and/or to introduce a new one with more bells and whistles. A color display, perhaps?

Amazon hasn't been resting on its laurels. The company began selling Kindles at about 100 Target (TGT) stores this month -- a recognition, perhaps, that some customers need to see one up close before spending hundreds of dollars.
It was a smart move. Amazon also made a wise choice in developing a sharp Kindle app for the iPad. But the company needs to do much more.

Perhaps WalletPop sums up the situation best:
The Kindle faces a serious lack of sex appeal. The black and white screen of the Kindle looks like an antique from the 1970s beside the larger, sharp-color screen of the iPad and the numerous clones soon to hit the market. The Kindle's inability to serve as an acceptably fast Internet browser also makes it seem primitive.
Now, the choice for consumers is clearer than ever, writes Peter Kafka at MediaMemo. "Get a single-purpose reading device for less than $200, or pay much more than that for a computer that also has e-reading software."


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