Price war heating up over electronic reading devices

The summer is kicking off with a price war over electronic reading devices.

Barnes & Noble started the action last week by dropping the price of its popular Nook reader from $259 to $199. That led Amazon to knock $70 off its Kindle; its $189 price undercuts the Nook by 10 bucks.

Both devices are 3G-capable, which means you use the cellular networks to download books. (Users don't have to pay monthly services for this product.) If you just want a Wi-Fi product, Barnes & Noble offers a $159 Nook that does not have 3G.

Forrester Research backed up my theory that e-reader prices will need to drop $50 to $100 before gaining mass acceptance. And when will that be? My bet is this Christmas. And by Christmas 2011, with little need for solo-use devices, these things will be in Happy Meals.

Amazon and Barnes & Noble, facing tough competition, had little choice but to cut prices. Apple's iPad now owns the expensive space at $499, and a whole slew of Google Android tablets — aimed at the middle ground — are about to hit the market. They may give the iPad a run for its money.

The Android tablets have a real opportunity. They can come in with color options, 3G connectivity and multitasking at a very low price and really screw up the market. But Apple may have something up its sleeve: When its next iPad comes out in a little while with the camera and multitasking abilities, the current $499 model could go to $299. Remember all those people who paid top dollar for the first iPhones, only to find them in the bargain bin in a few months?

What the dedicated readers have going for them are elegant, backlit screens and great battery life. If you're on a plane for a long time, you want the Kindle's 30 hours and not the iPad's eight to 10 hours. So score one for the Kindle and the Nook. The iPad and Android devices have to fix the screen and battery life for low-power consumption in book reading.

Meanwhile, companies can work on deals with major magazine and newspaper publishers to reduce the devices' prices. (Buy a three-year subscription to an online newspaper or magazine and get $10 off the reader, etc.)

Publishers need to do something about book prices. As an author, I can tell you there are significant costs in printing and distributing the physical book. E-books need to be lots cheaper than they are now to make this whole model work well.

James Derk is owner of CyberDads, a computer-repair firm, and a tech columnist for Scripps Howard News Service. His e-mail address is jim@cyberdads.com.