Amazon’s Kindle reader appeared to be the perfect product for Amazon. Its dominance of the e-book reader market was complete, it enjoyed approximately 60% of all e-book reader sales, and it was very difficult to see where the competition was coming from. There were numerous predictions of a “Kindle killer”, but despite the release of competing readers by the likes of Sony, Barnes and Noble, Plastic Logic and Bookeen, the Kindle looked very secure in its number one position.

Then Apple launched their long awaited iPad and, although it is a completely different device, it did seem set to upset Amazon’s plans somewhat. The iPad is not without some fairly major shortcomings of its own, and whilst most Apple devices seem to engender a “love them or loathe them” response, the numbers of people who would buy almost anything with the Apple logo on it are certainly large enough to make a major dent in the sales of the Kindle.

As well as releasing new, sexy hardware, Apple also agreed a deal with many of the major publishing houses which let them charge whatever they liked for e-books – as long as they weren’t offered for less on any other device – the Kindle in other words. This appeared to basically kill off Amazon’s ambition to price all e-books at $ 9.99 or less. It certainly seems that e-book prices have been trending up since the launch of the iPad. It does seem a little strange that increased competition should drive prices upwards – but there you have it.

The situation with the e-book reader hardware itself is somewhat different. The price of Barnes and Noble’s Nook reader has been cut from $ 259 to $ 199. Amazon have now cut the price of the Kindle 2.0 from $ 259 to $ 189 – a very low number considering that it retailed at $ 359 when it was launched in February of 2009. The price of the larger format Kindle DX has also been cut from $ 489 to $ 379, an event which coincides with the device’s first upgrade which incorporates a higher contrast screen and a new body color.

Even the pricey DX model is now over $ 100 cheaper than the cheapest of the Apple iPad range. Unlike the Kindle family, iPad users also have to pay a monthly fee for their 3G connection. Of course, the iPad is much more than an e-book reader, so it may be that people are prepared to pay more for a more powerful and versatile device – even if it does have much poorer battery life and a less “reading friendly” screen (which excels for other applications).

It will be interesting to see whether these e-book reader price cuts are no more than a knee-jerk response to the launch of the iPad or whether they signify a new approach to the pricing of e-book readers and e-books. It could be that companies like Amazon and Barnes and Noble might take advantage of the trend for higher priced e-books by offering lower priced hardware secure in the knowledge that they will make their profit throughout the life of the device. Or it may just be a stalling tactic until the next generation color Kindle hits the streets later this year.

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