Fresh price cuts for Amazon Kindle 2 and Barnes & Noble Nook

With Apple’s launch of the iPad, the e-book reader industry suddenly had a new and deadly competitor to deal with. Single function devices like the Kindle 2 and Barnes & Noble Nook appeal to an audience of power readers while the iPad appeals to readers + bloggers + web surfers + gamers etc. BUT are those multi-taskers willing to pay the premium for that functionality? Amazon and Barnes & Noble are betting they won’t and have cut prices again for the Kindle 2 and Nook.

The iPad starts out at about $500 for a Wi-Fi only connection and Barnes & Noble just debuted a similarly modeled Nook with Wi-Fi only for $150. That much of a price gap certainly warrants some thinking on what a device will primarily be used for. The Nook has some functionality built into its touch screen on the lower part of the device but nothing close to the iPad’s versatility.

For people who want to download content in more places the Nook also comes in the Wi-Fi + 3G for $199 which is just a tad more expensive than Amazon’s Kindle 2 now priced at $189 (which also has Wi-Fi + 3G). That’s certainly in the realm of affordability for lots of people and will likely put e-readers into the hands of more median income individuals and families.

The Kindle 2’s claim to fame is its “#1 bestselling product across the millions of items sold on Amazon” status which the company likes to reiterate often. So many people buying means it has to be good, right? For avid readers probably, but don’t be looking for much diversification soon because the Kindle 2 is all about reading.

Barnes & Noble is creating a little buzz too with a promised software update that will add more features. Nothing gets fans riled up quite like free updates that make their devices do more. Now if one of these companies can figure out a way to make e-readers free and earn their money back by selling e-books then they’d probably have masses of customers queued up and waiting.