On June 21, 2010, Amazon, the largest online book retailer, dropped the price of its popular Amazon Kindle e-book reader from $259 to $189 in the
Immediately, Barnes & Noble, another major U.S book retailer dropped the price of its Nook ebook reader from $259 to $199. The company also introduced a new Wi-Fi only Nook priced at $149.
The price drop is seen as a way to cope up with the increasing competition from Apple iPad and other tablet PC makers.
Despite being expensive, many people prefer Apple iPad over dedicated ebook reader for they can perform a wide range of functions including serving as an ebook reading device.
The entry price for an Apple iPad is $499. Within first two months after its launch, Apple sold two million Apple iPad. The tablet PC comes with integrated ebook reading application called iBooks.
James McQuivey, analyst, Forrester Research, said that cutting price was inevitable but they never expected it so soon and so rapid.
To attract most customers Amazon has been selling books at $10 which irked many publishers. They feared that Amazon someday would force them to decline the price of the e-books.
Apple then came in and allowed publishers to sell books at a higher price ($15 per title). Under the new, agency business model, the publishers could sell books at a higher price and could make 30 percent commission on the sales.
Many analysts believe that within a year or so, e-book reader will be a dead technology because many tablet PC would come to the market in near future offering various features along with e-book reading applications. As a result people would not show any interest in buying dedicated e-book readers.