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The Kindle reader seemed to be the ideal product for Amazon. It totally dominated the e-book reader market, commanding about 60% of all e-book reader sales, and it was hard 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 the Apple iPad hit the market and, although it is an entirely different device, it did look set to spoil the party somewhat. Apple’s iPad, as many industry watchers have been quick to point out, is not without some fairly major flaws of its own, but the sheer volume of consumers who would buy almost anything with the Apple badge on it will be more than enough to make a major dent in the Kindle’s sales figures.

In addition to the release of new, sexy hardware, Apple also negotiated with many of the major publishers and forged a deal which permitted them to charge whatever they wanted for e-books – on the condition that they were not made available 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 lower. It certainly seems that e-book prices have been trending up since the launch of the iPad. It does seem a little counter-intuitive that prices should rise as a result of increased competition – but that’s exactly what happened.

The situation with the e-book reader hardware itself is somewhat different. Barnes and Noble have dropped the price of their Nook reader 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 large display Kindle DX has also been reduced 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. Neither does the iPad come with connection to the internet for free as is the case for the Kindle reader range. 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 if this downward price movement of e-book readers is just a temporary reaction to the iPad or whether it heralds the dawn of a new pricing policy. 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, in Amazon’s case at least, it may be no more than a holding tactic until the next generation color Kindle hits the market later this year.