Price war! Amazon drops Kindle to $189, down from $259

The price reduction was no doubt spurred by Barnes & Noble's equally aggressive Nook cost cut & pressures from tablet devices

Wasting little time in responding to Barnes & Noble's new lower prices for its Nook e-readers, Amazon today slashed the cost of its Kindle device to $189, the company announced. The new price is $70 off the Kindle's previous $259 list, and $10 less than a comparably equipped Nook.

Both the $189 Kindle and the $199 Nook are 3G-enabled wireless devices that use a cellular connection to download books, periodicals, and other content. Kindle and Nook users don't pay monthly fees for 3G service. Barnes & Noble today also introduced a $149 Wi-Fi-only Nook.

The lower-priced Kindle and Nook e-readers join Borders' $150 Kobo and the $199 Sony Reader Pocket Edition in the suddenly hot sub-$200 e-reader market. However, neither the Kobo nor the Sony Reader Pocket Edition has wireless connectivity. Rather, each requires a wired connection to a PC to download content.

The rapid drop in e-reader prices isn't unexpected. A 2009 report by Forrester Research suggests that e-readers would need to cost $50 to $100 to gain mass market acceptance. One option that e-reader manufacturers may still pursue is to team up with content partners, such as magazine, newspaper, and book publishers, to offer subsidized devices with lower up-front costs.

"Device makers should partner with companies that have incentives to subsidize the device in exchange for a content subscription (newspapers like the Detroit Free Press) or service subscription (mobile carriers like Verizon, which already has a similar model for mobile phones and now netbooks)," the Forrester report states.

While Amazon's Kindle price reduction was no doubt spurred by Barnes & Noble's equally aggressive Nook cost cut, pressures from tablet devices such as the Apple iPad are pressuring e-reader prices at the high end too. With the multi-use iPad starting at $499--and upcoming Android-based tablets likely to debut at even lower prices--it was increasingly difficult for Amazon and Barnes & Noble to justify the cost of a $259 e-reader.

What's next, a free Kindle with an Amazon E-Book of the Month Club subscription?

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Jeff Bertolucci

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