The back page of today’s (June 22 2010) New York Times news section carries a full page ad for Barnes & Noble’s Nook e-book reader. The price is $149.00 for a Wi-Fi only version.  But the price of the original model introduced a year ago also dropped from $259.00 to $199.00 according to the Times‘s Brad Stone. In response Amazon cut its undercut its rival, dropping the Kindle price to $189.00.

Is this the start of a price war or an adjustment that has bottomed out?  And why are prices dropping in response to the success of Apple’s iPad selling at almost three times the cost of its Amazon and B&N rivals?  Read In Price War, E-Readers Go Below $200 for some insights.

Stone quotes B&N’s CEO William J. Lynch as predicting that within a year the cost of a device will drop below $100.00, the fabled threshold below which appliances become as commonplace as pencils.  But why would prices stop there?  We have long urged the industry to consider adopting the so-called Gillette Razor model: give the device away and charge for the content. (See King Gillette and the Kindle)

A free e-reader?  As of today, we’re only $149.00 away.

Richard Curtis