E-Reader Prices Continue to Fall

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If you've been eyeing an e-reader but the price tag is spoiling the plot, the story gets a bit more interesting for you today.

Both Barnes & Noble (NYSE: BKS ) and Amazon.com (Nasdaq: AMZN ) dropped the prices of their devices yesterday. Barnes & Noble started the fun by cutting the price of its $259 3G and Wi-Fi Nook to $199, and also unveiled a Wi-Fi only model for $149. Amazon countered by lowering the Kindle's price from $259 to $189. (The larger Kindle DX remains at $489 for now.)

These are moves analysts are widely interpreting as a reaction to the popularity of Apple's (Nasdaq: AAPL ) iPad tablet computer. Why pay $259 for a dedicated e-reader when, for less than double that, you can get a $499 iPad that not only displays books in living color, but does a bazillion other things as well?

I don't see things quite that way, however. The iPad may be playing a role in the price cuts, but we're talking about two completely different markets here: avid book readers vs. technophiles who don't mind reading a book now and then on their tablet computer. Most people agree that dedicated e-readers offer a better experience to the former.

And where do avid readers return to again and again? The digital bookstore, of course, to buy more books. That's why we'll see e-reader prices continue to drop over the coming months and years as Amazon, Barnes & Noble, Sony and others continue to fight for digital bookstore market share. Not quite a give-away-the-razor-and-charge-for-the-blades business strategy, but close.

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Fool analyst Rex Moore can't decide if he's an avid reader or a technophile. He owns no companies mentioned in this article. Amazon.com and Apple are both Motley Fool Stock Advisor choices. The Motley Fool has a disclosure policy.

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