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Kindles continue to get cheaper, and this time it has nothing to do with Amazon.com (Nasdaq: AMZN ) .
AT&T (NYSE: T ) has agreed to sponsor the Kindle 3G with Special Offers that serves up screensaver ads to dormant e-readers, driving the price down from $164 to $139. The ad-free Kindle 3G remains perched at $189.
It's a bold move, matching the price of Barnes & Noble's (NYSE: BKS ) entry-level Nook that lacks 3G connectivity. Readers need to locate a hot spot to download fresh content. The subsidized price also matches the $139 that Amazon charges for its Wi-Fi Kindle, though Amazon also offers ad-supported Wi-Fi Kindles for $114.
AT&T's sponsorship is essentially shaving $50 off the 3G model. Why couldn't it do the same with the Wi-Fi version to bring that one all the way down to $89?
Well, the key here is the 3G.
"Kindle 3G is by far the fastest-growing connected device on the AT&T network," AT&T's Ralph de la Vega claims.
Keep in mind that this doesn't mean that AT&T is sponsoring the 3G connectivity itself, as a spokeswoman clears up to PaidContent.org. Amazon is still covering the data charges consumed when owners are browsing through Amazon's store and downloading fresh newspapers, magazines, or books. AT&T is simply making its own luck by making sure more e-reader buyers -- and advertisers -- go through its wireless network by making the 3G model as cheap as the Wi-Fi competition. The move will also make it harder for Amazon to consider switching to a different carrier.
The e-reader market has come a long way since the first Kindles rolled out in 2007 at a $399 price point that seems ghastly in retrospect.
Remember when there was the fear that Apple's (Nasdaq: AAPL ) multifunctional iPad would nudge e-readers toward obsolescence? Well, that obviously didn't happen. Amazon, B&N, and Sony (NYSE: SNE ) simply made sure their e-readers could get better and cheaper. By sticking to its $499 entry-level price, every price cut on the e-reader site widens the differentiation between the two devices.
It won't be long before we see a fully subsidized Kindle. If AT&T can sponsor the 3G model, why can't a newspaper company bundle a long-term e-reader subscription with the rights to serve up ads beyond the screensaver and home page?
Prices continue to inch lower one way or another, and now we're simply on a race to free.
Have you recently become an e-reader convert? Share your thoughts in the comment box below.