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In the second half of 2009, the e-book reader market was just starting to take off and competition was really hotting up. Following the enormous success which Amazon had achieved with its Kindle reader – firstly with the Kindle 2.0 in February of 2009 and then with the large format DX edition in the summer of the same year – a veritable host of personal electronics manufacturers were either developing, releasing or updating their own e-book readers so as to get their share of the nascent market.

Sony and Barnes and Noble were bursting a gut to get their new readers launched before the 2009 festive season and Samsung, Plastic Logic, Asus and a host of others were rushing to get their readers on the market as fast as they could. For the first time ever, the Computer Electronics Show, which took place in Las Vegas during early 2010, featured a dedicated area for e-book readers. E-book readers were a hot new emerging market.

At the moment however, just a few months later, the outlook is markedly different. The price of e-book reader hardware has plunged. The latest third generation Kindle now has a Wi-Fi only entry level model available for only $ 139 - less than 40% of the $ 359 price which the Kindle 2.0 launched. Barnes and Noble have also dropped the price of the Nook reader to S 149 - and this will probably be cut again before the festive season.

A number of e-book readers which were in development – including the Que from Plastic Logic – have been abandoned. The market appears to be entering a new phase in its development - whether there will be a place for pure electronic manufacturers in future or not is somewhat debatable. Amazon’s business model is very well suited to selling lower priced reader hardware and making a profit on the ongoing sales of Kindle books. A similar strategy would be available to Barnes and Noble of course, but it’s debatable as to whether or not they can benefit from the same types of economies of scale as Amazon.

Of course, it would be lunacy to suggest that the launch of the Apple iPad had not played a major part in this. There’s no doubt that the price of e-book reader hardware was going to fall anyway - but the arrival of the iPad on the scene has certainly hurried things along. However, considering that the third generation Kindles sold out almost immediately after launch – even today customers are facing a three to four week wait for their Kindles to ship – it doesn’t look like the iPad is the long awaited Kindle Killer that it was widely forecast to be.

Apart from the debate about e-ink displays being easier to read on than backlit screens, there is - for the moment at least - enough daylight between the price of the Kindle and the price of even the entry level iPad to make the Kindle the more attractive option for anyone whose primary interest is reading books. The iPad’s monthly connection fees will be a stumbling block for many customers.

It does start to look like there is ample room in the market for both the Amazon Kindle and the iPad to co-exist - for the short term future at least. Other manufacturers of e-book readers, including big players such as Barnes and Noble and Sony, may well find things tough as hardware prices keep dropping.