Price slashing hots up e-reader rivalry

Shares in Amazon and Barnes & Noble fell around 3 per cent on Monday on fears of a possible e-reader price war, after the two booksellers cut the prices of their Kindle and Nook e-reader devices by around 25 per cent.

Amazon announced it was cutting the US price of the Kindle by 27 per cent from $259 to $189, shortly after Barnes & Noble, the bookstore chain, said it was cutting the price of its Nook reader from $259 to $199.

The move widens the price gap between the two products and Apple’s new multi-function iPad at $499.

The iPad, with more than 2m devices shipped in the first two months since its launch, is seen by Wall Street analysts as a potential threat to the Kindle’s current dominance of the growing e-reader market, with several having predicted that Amazon would respond with a price cut.

Amazon executives argue that the Kindle’s narrow focus as a reading device puts it into a different category from the multi-function iPad. While Apple recently launched its own digital book store, with four big publishing houses, it has far fewer books available than Amazon and Barnes & Noble.

Barnes & Noble has started selling a $145 version of the Nook that can download books at WiFi hot spots but not via the more comprehensive 3G phone network.

Borders, the second largest US bookstore chain, announced recently that it had started selling Kobo e-readers, without wireless capability, at $149, and a cheaper $119 model by Aluratek. Borders is about to launch its first e-book store.

Neither Amazon nor Barnes & Noble have given sales figures for their e-readers, although Amazon has said “millions” of its customers own Kindles.

Barnes & Noble has been heavily promoting its Nook device with print and television advertising and a strong presence in its stores.

Amazon has also been advertising heavily. It has started selling its Kindle e-reader through the electronics departments of Target discount stores, and has begun selling the device in its 1,700 stores.

The Consumer Electronics Association has estimated that sales of digital reading devices in the US will more than double to 5m units this year, from 2.2m last year.

Sales of digital books more than doubled to $27.4m in April from a year earlier.