B&N, Amazon, and Sony Race to Zero

We apparently haven't heard the end of last month's price war on e-book readers.

Sony (NYSE: SNE  ) is the latest manufacturer to work its Crazy Eddie magic on its hardware, slashing prices of its e-readers by $20 to $50 apiece. The move comes on the heels of even steeper markdowns by Amazon.com (Nasdaq: AMZN  ) and Barnes & Noble (NYSE: BKS  ) , but the end result is that all three companies now have slick e-readers selling for less than $200.

Is that enough?

Probably not. Apple (Nasdaq: AAPL  ) has sold more than 3 million iPads since its launch three months ago, and it's not a coincidence that cutthroat pricing didn't come into play until Apple's evolutionary gadget hit the market.   

Fans of conventional e-readers will tell you that the iPad -- and the many rival tablets set to hit the market later this year -- fail as e-book readers because of their backlit screens. The E-Ink that Amazon, Sony, and Barnes & Noble use is easier on the eyes, and more like a traditional novel.

"Good luck taking an iPad to the beach with the sun's glare," is a common knock, but is it valid? I live in Miami. I've been to the beach quite a bit. I've never seen a sunbather whip out a Kindle. Sand, lotion, and electronics don't mix very well.

Let me also come to the defense of the colorful tablet screens. Facebook is closing in on 500 million users. How many of them do you think spend more time reading from a computer screen than they do from traditional print or E-Ink platforms?

Fatigue and low battery life concerns on iPads, relative to the Kindles, Nooks, and Readers, are overblown. If e-book readers can only do one of the tens of thousands of things that one can do with a tablet, the iPad will win.

The price war helps differentiate the platforms. The Kindle has a better shot going up against the $499 iPad at $189 than it does at its most recent $259 price point. However, if they want to gain serious ground, the hardware manufacturers need to sharpen their business models to the point where readers are practically given away.

That won't be easy for Sony, which lacks the book retail backbone of its E-Ink peers. Borders (NYSE: BGP  ) has the infrastructure, but it's late to the game. Barnes & Noble may lack the financial muscle to see this through, leaving Amazon as the industry's best shot against Apple.

The price cuts will continue -- at least until the competition shakes out weaker players, or publisher-subsidized models become feasible. The bloodletting is just getting started.

Will your next gadget purchase be a Nook, a Kindle, or an iPad? Share your thoughts in the comments box below.

Apple and Amazon.com are Motley Fool Stock Advisor selections. Try any of our Foolish newsletters today, free for 30 days.  

Longtime Fool contributor Rick Munarriz has been shopping online for about as long as Amazon.com has been in business. He owns a Kindle and an iPad. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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