New York: Amazon.com Inc cut the price on its most expensive Kindle electronic reader, the latest salvo in a price war in response to Apple Inc`s pricier iPad tablet computer.
It was the second price cut for the online retailer`s line of e-book readers in as many weeks. Last week, Amazon cut the price of its cheaper Kindle with a 6-inch screen to $189, hours after bookstore chain Barnes & Noble Inc lowered the price of its "Nook" e-reader to $199. Both had cost $259.
Amazon and Barnes & Noble could be forced to cut prices further on their devices to compete with the iPad, Which also functions as an e-book reader and which sold more than 2 million units in its first 60 days on the market.
"(Prices) could go to zero," said Needham & Co analyst Charles Wolf, who said manufacturers should price the devices low to drive sales of e-books. If priced correctly, e-books would make up for any losses on the e-readers themselves.
"Amazon`s model should be selling books- and to hell with the device itself," Wolf said. "The iPad is raising hell with everybody."
The price cut on Thursday was on the Kindle DX, which comes with a 9.7-inch screen. The company said it updated that reader to include a new graphite enclosure and a new, high contrast electronic ink display.
The reader will sell for $379, down from $489, and have free 3G wireless connection with no monthly bills or annual contracts, as the earlier model did, the company said. The new Kindle DX is available for pre-order starting today and it ships July 7.
The latest price cut comes as retailers such as Amazon and specialty book store chain Barnes & Noble try to protect their share of the e-books market, the rare bright spot in the moribund bookselling industry.
Earlier this week, Barnes & Noble said sales on its website, which includes e-books sold via the Nook, would rise this year by 75 percent and reach $1 billion. It added the Nook will be central to reaching its goal of winning 25 percent of the e-book market within a few years. It currently has about 20 percent of the e-books market.
But Barnes & Noble, the No. 1 U.S. bookstore chain by sales, also warned that investments to develop the Nook and its e-bookstore would weigh on results this year.
In addition to the iPad, the Nook and Kindle also compete with Sony`s Reader device. Industry experts and rivals say the field will get even busier, with more e-readers expected this year. Borders Group Inc is set to launch its own e-bookstore soon but is not developing its own reader.
Apple`s iPad, launched in April at a starting price of $499, but unlike competing models, it has a color screen and can be used as a full computer.
Still, some analysts say dedicated e-readers such as Nook and Kindle are appealing because they consume less power, are easier to read on, and weigh less.
Kindle`s base price plunged even lower on Thursday morning to $149.99 -- but only for one day -- on Woot.com, the quirky online store whose purchase by Amazon was announced on Thursday. By 9:30 AM ET, the e-readers were already sold out.
Shares of Amazon.com were down 1.2 percent on Thursday, while Barnes & Noble shares were down 2.1 percent and Apple shares were down 2 percent.