Amazon slashed the price of the Kindle, just hours after rival Barnes & Noble announced it was cutting the price of its electronic reader.
Amazon's response Monday to B&N ushered in a new front in the e-reader battle: price. Soon after B&N said it would sell the Nook 3G for $199, Amazon said it would sell the standard Kindle for $189. Both e-readers had cost $259. Amazon did not change the price of its larger Kindle DX, which still sells for $489.
To lure even more buyers, B&N also introduced an even cheaper model. For $149, a person can buy a Wi-Fi-only version of the Nook. The more expensive model offers a Wi-Fi connection and access to AT&T's 3G wireless network for buying and downloading books from B&N's online store.
With competition growing in the e-reader market, analysts have said that prices would fall. Besides pressure from e-readers from Sony, Borders and others, Amazon and B&N are also facing competition from tablet-style computers that are considerably more expensive, but also offer much more than just displaying digital books. Offerings like the Apple iPad, for example, can also show video, play music, browse the Web, check e-mail and more. Hewlett-Packard and Dell are expected to enter the tablet market soon.
The Kindle and Nook 3G are comparable. Both have Wi-Fi and 3G connections and use the same E Ink digital paper display. The Kindle, however, is lighter at 10.2 ounces versus 11.6 ounces for the Nook. The latter has a color touchscreen for navigation, while the Kindle uses a keypad. Amazon offers more than 600,000 e-books, and B&N says it has more than a 1 million.
With booksellers getting an increasing amount of revenue from digital books, analysts say e-readers will become more important as a vehicle for increasing e-book sales. As a result, prices of e-readers could fall even further, particularly for Wi-Fi-only devices.
In dropping the price of the Nook, B&N also released a software update that primarily adds complimentary access to AT&T's nationwide Wi-Fi network, as well as continued access to B&N's network in the retailer's stores.
To differentiate their offerings, Amazon and B&N are also adding social networking features. B&N allows customers to "lend" e-books for up to 14 days with each other, while Amazon lets Kindle users share e-book passages with friends and followers on Facebook and Twitter.