Kindle and Nook prices cut in battle with iPad

by Glenn Chapman, Agence France-Presse

Posted at Jun 22 2010 02:57 PM | Updated as of Jun 22 2010 10:57 PM

SAN FRANCISCO - Amazon and US bookstore giant Barnes & Noble cut the prices of their electronic book readers in the face of Apple's iPad momentum in the fledgling market.

Amazon on Monday dropped the price of its Kindle e-reader to $189 from $259.

The cheapest iPad, a multi-purpose tablet computer that features a color e-reader compared with the black-and-white "e-ink" Kindle devoted exclusively to digital books, costs $499.

Barnes & Noble said Monday it was lowering the price of the Nook with 3G and Wi-Fi connectivity to $199 from $259.

Barnes & Noble also said it was introducing a Wi-Fi only version of the Nook for $149. Kindle has 3G wireless connectivity to allow users to quickly download digital books.

Barnes & Noble's chief bookstore competitor, Borders, also offers an e-reader, the Kobo, for $150.

Apple has sold more than two million iPads since the touchscreen tablet computer went on sale in the United States in early April and in nine other countries late last month.

Amazon touts Kindle as the top selling item at the powerhouse online retailer, but Amazon and Barnes & Noble do not release sales figures for their e-readers.

"Amazon has been well ahead of the industry curve in terms of the digital adoption of books," Citigroup Internet analyst Mark Mahaney said in a note to investors.

"Our overall take is that Amazon's share of total book sales can still continue to expand over the next three to five years."

Market fears that iPad will eat into the e-reader market are valid and Apple's new gadget puts pressure on Amazon to release an enhanced new generation Kindle, perhaps with touch-screen controls, according to Mahaney.

Analyst Rob Enderle of Enderle Group in Silicon Valley suspects that Barnes & Noble inadvertently triggered "e-book war" by dropping the Nook price to boost sluggish sales of its e-reader, which got marginal reviews.

"I think it was initially to move out Nook inventory," Enderle said. "I don't think that Barnes & Noble thought through the fact it would start a price war."

Prices less than $200 for e-readers are in a "sweet spot" where people will be more likely to buy gadgets they aren't certain they will be happy with, according to Enderle.

"You drop the price under $200, you open up your market tenfold," the analyst said. "It will put more pressure on publishers to get books into that digital market, absolutely."

The pricing cuts are expected to be only glancing blows to iPad, which appeals to people interested in Internet surfing, video viewing, and more instead of devices devoted exclusively to enjoying digital books.

"For anyone serious about reading, the Kindle and Nook are more attractive," Enderle said.

"The iPad buyer, for now, is a different buyer. The iPad is more a Swiss army knife approach to products."

E-book sellers can afford to discount their hardware because of the pay off from readers that go on to buy numerous digital books, according to analysts.