A price war is brewing in the growing market for electronic reading devices.
Barnes & Noble, the national bookseller, announced it was dropping the price of its six-month-old Nook e-reader to $199 from $259 and introducing a new version of the device, which connects to the Internet only over Wi-Fi networks, for $149.
Responding rapidly, Amazon.com then cut the price of its Kindle e-reader below the Nook, to $189 from $259.
The price cuts were made as manufacturers of e-readers faced a mounting threat from Apple’s iPad. Even though it is far more expensive than the e-readers, the iPad, which starts at $500, performs a range of functions with a versatile, colourful display that contrasts sharply with the static, monochrome screen of e-book readers. Apple said it sold more than two million iPads in the two months since the introduction.
“It was obvious that the price of stand-alone e-readers had to come down,” said James McQuivey, an analyst at Forrester Research, citing the threat by Apple and other tablet makers. “We just never thought it was going to happen this rapidly.”
Until this spring, e-book sellers like Amazon and Barnes & Noble sold many best-selling e-books at a loss to entice customers. But then five of the six major American publishers agreed with Apple to change to a so-called agency sales model.
Under the new agreement, booksellers were required to raise prices on many digital books and were able to make a 30 per cent commission on the sales, which allows them to sacrifice some profit on their hardware.
Steven P. Jobs, Apple’s chief executive, said this month at the announcement for the company's new iPhone model that iPad owners had downloaded more than five million books in the last two months, or 2.5 books for each iPad. It was seen then as a troubling sign for Amazon because it revealed that iPad buyers were willing to make small sacrifices to read books on a general-purpose tablet that is heavier and has a bright LCD screen that can cause eye fatigue. NYT