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E-reader Price War Underway

June 22, 2010

Amazon Inc. and Barnes & Noble Inc. cut prices on their electronic book readers on Monday, responding to growing competitive pressure from Apple Inc.’s iPad.

Amazon cut the price of its Kindle e-reader to $189 from $259, while Barnes & Noble said it would reduce the price of its Nook e-reader with 3G and Wi-Fi connectivity from $259 to $199.

By comparison, the least expensive iPad costs $499.  However, a direct comparison of the devices is problematic, since the iPad is a touchscreen tablet computer that includes a color e-reader, whereas the Kindle is a device devoted exclusively to reading books using black and white “e-ink”.

Barnes and Noble also said it was introducing a Wi-Fi only version of the Nook for $149 dollars. The Kindle has 3G wireless capabilities that let users quickly download digital books.

Barnes & Noble’s chief rival, Borders, also sells an e-reader called the Kobo for $150 dollars.

Apple has sold more than two million iPads since the U.S. launch of the device in early April.  The iPad went on sale in nine other countries last month.

Although neither Amazon nor Barnes & Noble release sales figures for their e-readers, Amazon says the Kindle is their top-selling item.  The online retailer also sells a larger-screen Kindle, known as the Kindle DX, for $489.

Shares of Amazon’s stock closed at $122.55 on Monday, down $3.28, or 2.61%.   Shares of Barnes and Noble’s stock declined 54 cents, or 3.16%, closing at $16.53.

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