Amazon, Barnes & Noble cut prices on electronic readers

NEW YORK -- A price war is heating up in the electronic reader market as Amazon cut the price of its Kindle e-reader below $200 Monday just after Barnes & Noble did the same with its competing Nook device.

The moves are fanning flames in the still small but rapidly growing market that the book industry sees as a major part of its future.

On Monday afternoon, online retailer slashed the price of the Kindle by $70 to $189 just a few hours after bookseller Barnes & Noble reduced the price of the Nook by $60 to $199 and said it will also sell a Nook with Wi-Fi access only for $149.

Both the Kindle and the original Nook can wirelessly download books over high-speed data networks; the Nook also has Wi-Fi access.

Seattle-based Amazon has lowered the Kindle's price several times since the e-reader with a grayscale screen debuted in 2007 at $399. In October, Amazon dropped the price to $259 from $299. Amazon also sells a larger-screen Kindle, the Kindle DX, for $489.

The Nook was released late last year for $259.

Both e-readers are creeping closer to the price of bookstore chain Borders Group's new $149 Kobo e-reader, which will be available in July and work with Borders' online bookstore.

And the cuts mean that the price gap between those products and Apple's touch-screen iPad, which starts at $499, is widening. The popularity of the iPad, along with a number of other tablet computers soon to be available that offer many functions, has pressured e-reader makers to lower prices.

Michael Norris, a senior trade analyst at Simba Information, said the Nook's price cut indicates that New York-based Barnes & Noble "is admitting that when they're up against a $500 digital photo frame on acid that does everything, they can no longer keep a straight face when selling something for $259 that only does books."

He also expects Amazon to reduce the Kindle's price, but not so quickly.

"I think it just makes them look really insecure and reactionary," Norris said.

Despite all the hubbub and price cuts, the market is still small: Nine percent of U.S. adults bought at least one e-book last year, he said.